Jul 17, 2008
What happens with Bank Account in Bankruptcy?
by Bi3ard / General
You’ve touched the wall. The only exit is to declare the bankruptcy, which is painful, but not incurable process. But what happens then with the most important part – your Bank Account?
Upon filing for bankruptcy your bank account will be closed. Your next task should be making alternative arrangements for receiving your wages and paying bills.
It’s possible for you to do this through a Bankruptcy Bank Account, otherwise known as a "basic bank account" or an "instant access account", which will have basic banking facilities.
How to get a Bankruptcy Bank Account?
You first have to decide which of the bankruptcy bank accounts is most suitable for you. Then you should check the accuracy of the credit report that will be checked. If you have been discharged from bankruptcy then make sure your credit report shows this. If it doesn't, then automatic credit scoring may mean that you get declined for the bank account.
Note that it is important for you to check your credit report before applying for an account. Your application may be turned down if it contains any mistakes or fraud attempts. Also, don’t apply for your bank account until the bankruptcy order has been made. Otherwise your account may be frozen.
After you checked your credit report, contact the bank and apply. You will probably have to go to the bank with proofs of ID and address. You may also need to provide and present a discharge of bankruptcy certificate.
According to the Bank Code you should be offered a basic bank account "if you specifically ask and meet the qualifying conditions for one".
However, it is possible that you may not be offered account. If this is the case you may be able to complain under the Banking Code.
So, it’s important to check the Bank code and what solutions it offers for certain situations and issues.
Have in mind that your application is likely to be turned down if you have a record of a fraud.
Features of Bankruptcy Bank Account
Some accounts offer more features than others.
However, you cannot expect credit facilities with a bank account after bankruptcy. Also, you would probably be able to have only Visa Electron card debit card and not credit card.
At a later date, upgrade from a bankruptcy bank account may be possible, depending on you and your record only.
The other features that you should have access to are: Internet and telephone banking. Also you’ll be able to make bill payments and set up direct debits.
You cannot expect some major improvements over the night (Bankruptcy to be precise), but some feature that your bank offers should be ‘unlocked’ at some later stage, when you prove that you’re reliable customer again.
What happens with my current Bank? Can I stay with them?
Following the bankruptcy order, it is possible that your current bank may reopen your account or provide you with another. However this may take some time and it is not guaranteed.
Considering Bankruptcy as a sort of cut in your personal financing and your whole life, maybe the best thing after that cut is to make a new start. That includes new bank as well.
New relationships with different banks are an important phase in bankruptcy and post bankruptcy period. This step however can be the most important step you take.
Old bank knows your history and however successful your credit report might be after the bankruptcy, the bitter taste still stays and nobody can guarantee that your old bank won’t be biased.
Having a new bank means that you’re ‘new’ for them. Every positive item added to your credit report by your new bank will be a clear sign that you’re reliable as same as your credit report. In the other hand, negative items in your credit report will be considered only as a warning, not an obstacle in building a new relationship with your new bank.
The important thing to remember is that it’s only up to you to get your credit score back improved and stable, by staying diligent and moderate.
You can always learn on your own mistakes.
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