Bankruptcy can feel like a huge setback, but it’s there to give you a fresh start. It changes how you use your bank account, how you keep on top of bills, and even the way you handle day-to-day spending, but once you know what to expect, it’s a lot easier to stay in control of your finances.
For many people, the first step after bankruptcy is figuring out how to keep money coming in and bills going out without any hiccups. This often means finding the best bank account for bankrupts – something simple, reliable and built to work for your life now.
Opening a new account can feel like a hassle, but it doesn’t have to be. The Suits Me Essential account could be ideal – it means you can get your wages or benefits paid in, set up bills and payments, and manage everything easily online.
Banking after bankruptcy isn’t always simple, but you can make it work for you. Here’s how to get started.
What Happens to Your Bank Accounts in Bankruptcy
When you’re declared bankrupt, your bank will usually hit the pause button on your accounts straight away. This is to make sure no money is moved without approval from the “official receiver” (the person managing your bankruptcy).
If you owe your bank money – for example, through an overdraft – they may use any funds in your account to reduce the debt. This is called a “set-off.”
After this point, most standard current accounts will be closed. The good news is you can open a basic banking account that lets you receive wages or benefits, pay bills, and manage your money without access to overdrafts or credit. Suits Me offers an award-winning alternative account that’s quick to open, even if you’ve been bankrupt.
Paying Household Bills After Bankruptcy
Bankruptcy can write off certain debts, including overdue household bills like gas, electricity, and water, but only those you owed before your bankruptcy started.
Once you’ve been declared bankrupt, you’ll still need to keep up with all your new bills. That includes rent, utilities, mobile phone contracts, and council tax.
Setting up Direct Debits from a Suits Me Essential account can help you stay organised and avoid missed payments.
How Bankruptcy Affects Your Credit Score and Borrowing Options
Bankruptcy can give your credit score a big knock. It usually stays on your credit file for six years, making it harder to get credit cards, loans, or a mortgage.
If you’re looking to get back on track, Suits Me has an alternative banking account for people with bad credit that can help you manage your money, pay bills, and rebuild your financial confidence.
When you become bankrupt, any credit cards you have, even if the balance is zero, will usually be cancelled. You may be able to borrow small amounts in the future, but lenders will likely charge higher interest rates.
Rebuilding your credit takes time, but it’s possible. Start by:
- Paying bills on time every month.
- Spending within your means.
Eventually, you can get a credit card to borrow a small amount. Repay in full each month to help rebuild your credit score.
What Happens to Your Savings, Pensions, and Windfalls in Bankruptcy
- Savings: Any spare cash in your accounts may be used to pay any bills you owe.
- Pensions: Most approved pensions are protected, but rules vary, so it’s worth doing more research into the pension you use.
- Windfalls: If you inherit money or receive a large payout during bankruptcy, it may be handed over to the official receiver.
How to Rebuild Your Finances After Bankruptcy
While it’s challenging, bankruptcy can give you a clean slate when it comes to your finances. With the right tools and support, you can start to rebuild.
A Suits Me account could be your first step. It’ll give you access to essential banking features, cashback rewards, and the ability to stay on top of your money via online banking or our mobile app.
Ready to get your card and start rebuilding? Apply online today.
FAQs
Can I keep my bank account if I go bankrupt?
Usually, no. In most cases, your bank will freeze or close your account once you’re declared bankrupt, so you’ll need to open a banking account with another provider. A Suits Me Essential account is ideal for this – but you won’t have access to overdrafts or credit cards.
Will my bills be written off if I declare bankruptcy?
Some bills you owed before your bankruptcy, such as overdue utility bills, can be included in your bankruptcy and written off. However, any bills you receive after your bankruptcy starts must still be paid on time.
How long will bankruptcy affect my credit score?
Bankruptcy stays on your credit file for six years from the date it’s declared. After that, it’s removed automatically, but lenders may still ask about your history.
In those six years following bankruptcy, it can be harder to get loans, mortgages, or credit cards, but you can begin rebuilding your credit by managing your money well. You can use a Suits Me account to keep on top of bills and spend within your means to show lenders you can manage money responsibly.
Can I still get a debit card during bankruptcy?
Yes. Many basic bank accounts offer a debit card for making payments and withdrawing cash, even if you’ve been declared bankrupt. With the Suits Me Essential account, you’ll get a debit card to get paid, transfer money and manage your everyday spending. These accounts don’t include credit facilities like overdrafts.
What happens to my savings in bankruptcy?
Any savings you have when your bankruptcy starts may be used to repay your debts. In most cases, pensions are protected, but the rules can vary depending on your circumstances.
Which banks allow bankrupts to open a basic account in the UK?
Many UK banks offer basic accounts for people who are bankrupt, but eligibility varies. High street banks may have stricter rules, but Suits Me makes it easier to open an account quickly – even without a credit check.
Can I open a bank account after bankruptcy?
Yes. Suits Me accounts are designed for people with all kinds of backgrounds and circumstances. You can apply online without a credit check and start using your account once it’s approved.
