Opening a bank account after bankruptcy

Getting a new bank account is more complicated after bankruptcy, but luckily it's not impossible.

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From a financial point of view, very few things are as stressful as going bankrupt. Your whole financial life is turned upside down and things that previously you could do in a second now seem close to impossible.

Your bank account will inevitably be impacted. But it doesn’t mean that you can’t open a new one and start rebuilding your life soon after.

What happens to my bank account if I go bankrupt?

When you declare bankruptcy, your bank account will immediately be frozen, which means that you can’t either receive or make payments from it.

The official receiver will take control of your property, and in some cases, might establish that you can keep using your bank account for essential expenses. Your bank will then have to decide whether to let you do that or close your account anyway.

Even if you are lucky, this part of the process can take a bit of time, during which you won’t be able to access your account. There is no law preventing you from opening a new one, but most banks will not accept you, and in any case you are unlikely to get an account with the same range of features as before.

Undischarged vs discharged bankruptcy

For the first year after you declare it, your bankruptcy will be “undischarged”. This basically means that all your assets, including new ones you may come into possession of during this period, will be managed by the receiver and used towards compensating your creditors (apart from what you need for basic living expenses).

After a year, your bankruptcy will be discharged. Three months after your bankruptcy is discharged, your name also gets removed from the Insolvency Register.

Once your bankruptcy is discharged, it will be easier to find a bank willing to let you open an account. However, bankruptcy stays on your credit report for six years and most banks run a credit check when you apply for a current account. So while discharged bankruptcy generally makes things easier, it will not entirely solve your problems in terms of opening a new bank account.

Opening a current account after bankruptcy

So, what can you do if you need a current account after bankruptcy? You have two main options:

  • A basic bank account. These are mostly offered by traditional high street banks, so they are probably a better option if you like banking in person and speaking to someone in real life for customer service.
  • Bank accounts with no credit checks. Some digital-only banks do not run credit checks when you apply for a bank account, so you are much more likely to get accepted after bankruptcy. This is a better solution for people who like managing their account on their phone.

Basic bank accounts

Most high street banks offer basic bank accounts. They are current accounts that allow you to do all essential banking operations: you will be able to receive a salary, make transfers and get a debit card to pay for things in shops and online.

However, don’t expect a basic bank account to be the same as a full one. You most certainly will not get an overdraft facility, for example: your credit score will be very low after bankruptcy and your bank will deem it too risky to lend you money.

You usually won’t get a cheque book either, and your daily ATM withdrawal limit might be lower than with a standard account.

Table: sorted by interest rate, promoted deals first
Name Product Ratings Account fees Funding requirement Interest (AER) Arranged overdraft Incentive Representative example Link
The Co-operative Bank
Not yet rated
£0
No minimum funding requirement
0% AER
N/A
View details
Metro Bank
Not yet rated
£0
No minimum funding requirement
0% AER
N/A
View details
Bank of Ireland UK
Not yet rated
£0
No minimum funding requirement
0% AER
N/A
View details
Nationwide BS
We say
★★★★★
★★★★★
You say
★★★★★
★★★★★
£0
No minimum funding requirement
0% AER
N/A
View details
Royal Bank of Scotland
We say
★★★★★
★★★★★
You say
★★★★★
★★★★★
£0
No minimum funding requirement
0% AER
N/A
Free 24/7 Emergency Cash Service to withdraw up to £300 for online and telephone banking customers or £60 if not.
View details
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Bank accounts with no credit checks

Most digital-only banks will not check your credit report when you apply for a standard current account with them (although they might run a so-called “soft” check to verify your identity), at least not until you separately apply for an overdraft with them.

You still won’t be allowed to borrow money, but apart from that, you’ll get the same account as all other customers. Accounts with challenger banks also come with their own set of benefits, such as a quick and easy application process, a great mobile app (usually much better than what your average high street bank will try to get you to download), budgeting features to help you keep your finances on the right track and extremely low fees, even when you are travelling. Learn more about budgeting apps.

If you are the techy type, they are certainly worth a shot. Challenger banks and digital-only banking providers have become extremely popular in the UK in the last few years, and the biggest ones are Monzo, Revolut and Starling Bank.

Other

You have another couple of options you can consider. You can look at prepaid cards, which are much simpler products but will cover the basics, such as receiving money and making payments in shops. You can compare some on this page.

Finally, some companies such as Cashplus and thinkmoney offer dedicated accounts for people with bad credit. Being dedicated products, you can be confident you will qualify; but they also charge higher fees compared to standard accounts, so make sure the benefits they offer are worth the price before committing.

Frequently asked questions

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