What will happen to my Bank records when I am Bankrupt in UK

If you are declared bankrupt in UK your credit ratings and bank accounts can be severely affected because of your bankruptcy. There are several types of restrictions that you can be subjected to and you would need professional help and advice to handle the situation.

When a UK court declares you a bankrupt, you may be restricted from using your bank accounts, credit cards and cheque books. You will have to hand over these instruments to the Official Receiver appointed by the court.

Intimation will be sent to your bank or other financial organisations about your bankruptcy and they will freeze your accounts. Even your joint accounts will meet the same fate. When your accounts will be frozen, you will be debarred from making or receiving payments using your bank accounts. If there be any standing orders, it will be too affected because of your account’s freezing. In such a case, you would have to find an alternative option to pay your bills, if any.

What will happen to the money in your accounts?

Following your bankruptcy, the court appoints an Official Receiver or a trustee to supervise your bankruptcy affairs. This person gets control on your all assets. You will have no control on your properties, shares and all assets. The money in your bank account will be handled by the official receiver who will use it to repay your debts.

However, you can request your Official Receiver to release some amount in the following cases:
Requesting money for your urgent domestic needs such as, buying food, medicines or paying electricity bill etc.
Requesting your partner’s share that is held in a joint bank account.
If you owe money to your bank

If you owe money in forms of an overdraft or a bank loan to your bank, after bankruptcy they go with your creditors. Once you are declared a bankrupt, you can’t make payments to your creditors directly and they can’t ask for any payments from you either.

Once you are declared bankrupt, you will not be allowed to make payments to your creditors directly. Your creditors will also not ask payments from you. The Official Receiver appointed by the court will take care of the money in your account and will distribute the money among your creditors.

Impacts of bankruptcy on mortgages and secured loans on your home

When you go bankrupt, it’s the responsibility of the Official Receiver to pay for your bankruptcy debts. If your home is the only asset that can be used to raise some funds for paying to your creditors, the Official Receiver will resort to this option only. He will try to repay your mortgages or secured loans from the proceeds realized from the sale of your home.

Bankruptcy and your credit rating

Once you are declared bankrupt, the bankruptcy details are mentioned in your credit file. This may affect your credit score and lenders may find your credit ratings poor for awarding you any type of credit. Your bankruptcy details will determine your suitability for borrowings and credit. If you have a poor credit rating, lenders will show little interest in giving you any credit.

Your bankruptcy details will become a part of your credit file as soon as you are declared bankrupt and it will be there for six years. After completion of this period, this will be automatically removed from your credit file. In order to check your credit file and your present credit score, you may write to the credit reference agencies or get help of any independent debt adviser.

Bankruptcy and managing your money

Once you are declared bankrupt, it’s with your current bank to decide if you will be allowed to keep using your bank accounts. They may restrict you from using certain facilities and very limited number of options will be available to you. You will have to respect these restrictions imposed upon you in order to use your bank account. During your bankruptcy period, you need to obey the following restrictions:
If you intend to borrow an amount more than £500, you must tell the lender that you are bankrupt. If you borrow the amount without telling the lender about your bankruptcy status, it can be considered as a bankruptcy offence.
While trying to open a new account, you need to tell the lender that you are bankrupt.
When you open any new account, you need to inform about this to your Official Receiver. He may ask about the amount you have in your new accounts and you need to tell him about this truthfully.

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