Bankruptcy And Banking

Some people with very serious debt problems find they simply can't afford to repay their debts - and have to enter bankruptcy as a result.

Although bankruptcy can be the most suitable way of getting on top of unmanageable debts for people in this kind of situation, it will have a big knock-on effect on their finances.

Whether you're currently bankrupt or you've recently been discharged from bankruptcy, getting access to certain financial services and banking options can be difficult - but there are alternative options out there that could help.

Let's look at banking options for people in bankruptcy.

How will bankruptcy affect me?

Bankruptcy is usually considered a 'last resort' for people in very serious difficulty with their debts - as it comes with some significant downsides too.

It's quite likely that your valuable assets, potentially including your home, will be sold so you can repay your lenders what you can, and there'll be certain career restrictions too: you wouldn't be able to be a company director, for example, if you've been bankrupt.

Furthermore, whether your lenders have petitioned for your bankruptcy or you've entered it voluntarily, credit reference agencies will record the fact that you've been insolvent for six years - so your credit rating will be significantly affected.

As a result, you could really struggle to find a bank willing to let you open a current account. Having said that, there are other options you could consider…

Bankruptcy bank accounts

Some bank account providers offer accounts specifically designed for people who are, or have been, bankrupt. This type of account could help people in this situation to regain their financial wellbeing and avoid falling into debt problems once again.

Bank accounts for bankruptcy don't require a credit check, so no matter what financial problems you've had in the past, you won't be turned down (unless you have a record of fraud), although you usually have to be at least 18 years old and a UK resident to apply.

A bankruptcy bank account could also help you to get back on your feet financially. Some of them offer a built-in budgeting service, which could really help you get back in control of your finances so you're not worried about missing any of your bill payments or any of your other important monthly costs. This can deliver some peace of mind that you're getting your life and your finances back on track - and make debt problems in the future less likely.