Banks accept bankrupt customers

People who have been going through bankruptcy will find it very difficult to open a bank account in UK. At present, only two banks in UK provide basic banking facilities to the recently bankrupt citizens.

The Citizens Advice Bureaux are very concerned about UK bankrupts not having any bank account and they are trying to help bankrupt people in this situation. The Bureau doesn’t see any legal reason to debar someone from having a bank account when he has gone bankrupt. The Bureau is in favour of giving debit cards to the bankrupt citizens if not credit cards. Because of not having a debit card, such people have to carry the cash with them and this can be risky. When they don’t have a bank account, they also find it difficult to find a new job and thus their financial conditions keep on suffering. Employers prefer to avoid their candidature because of not finding a way to deposit their wages every month.

However, most of the bankrupts are only allowed to open basic bank accounts in UK banks. Such an account provides the facility of getting payments in the account and use of debit cards for withdrawal of money. An account holder can also set up direct debits for paying their bills every month. But customers with such a bank account will not get any credit. They will also not get any cheque book or overdraft facilities.

If you have been declared bankrupt recently and are not able to find any bank allowing you to open a bank account, you may approach your local Credit union or the Post Office. At these two places, you will be able to open a basic account for you. These are the two companies which happily offer banking services to the bankrupt citizens of UK.

The bankruptcy cases are growing day by day in the UK. As per an estimate by The Insolvency Service, more than 74 thousand new bankruptcy cases were reported last year in England and Wales only. With a large number of people going bankrupt, the problem of not having a bank account will further devastate their financial life.

As soon as someone is declared bankrupt, the banks don’t delay to freeze the accounts of the bankrupt person. And most of the employers don’t want to pay wages in cash. If you don’t have a bank account, you will have hard times in getting payments from an employer. Thus, you need to open a bank account with at least some basic facilities. These accounts have been introduced in UK several years ago as a government’s initiatives to encourage people to open a bank account who have a bad credit history.

The banks which are more liberal towards bankrupts in UK are Barclays, Cooperative Bank and the Nationwide Bank. These three banks happily welcome people with bad credit history to open a bank account. So, if you too want to open a bank account, send your applications to these three banks.

There are few other banks that consider cases of discharged bankrupts. But for undischarged bankrupts, opening a bank account is very difficult. Majority of the undischarged bankrupts are denied even a basic bank account. This seems to be against the government policy where government encourages a bankrupt to open a bank account and make a fresh start. Thus, banks have been recommended to allow undischarged bankrupts to open at least basic bank accounts. Banks need to review their policy which restricts them from giving basic banking facilities to the bankrupt people.

In any case, getting a bank account while you are in your bankruptcy days is very difficult. Your current bank may not allow you to re-open your existing account. They may not allow you to open a fresh account either during your bankruptcy. However, after few weeks of your bankruptcy discharge, they may allow you to open a new bank account.

Most banks will go through your credit reports before allowing you to open an account with them. If you have not been discharged from your bankruptcy, your credit report will show it and the banks will start distancing away from you. So, make sure that your credit report is accurate and has been updated regularly.

Besides your credit report, banks will ask your ID proof and address proof. Under the banking code of 2005, as a bankrupt you are entitled to open a basic account with a debit card but no cheque book or credit facilities.

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