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.
Bank accounts for discharged bankrupts
The accounts listed in the table below are a combination of no-frills accounts from large names in the banking world, while others are especially suited to discharged bankrupts, particularly since they don’t require a credit check.
Zempler and ThinkMoney offer accounts specifically designed to help build your credit history and improve your money management habits.
Both of these accounts come with nifty features but charge a monthly fee. Compare the options below to find the right account for your circumstances.
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.
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.
Alternative options
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 Zempler 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.
Can you get a business bank account after declaring bankruptcy?
Most traditional banks will carry out a credit check when you apply for a business bank account. That’s even if your business is registered as a limited company and is thus separate from your finances: they’ll check you as a director.
If you have recently had a bankruptcy, it will appear on your credit file and your application might be refused.
It is still possible to get a business bank account after bankruptcy, thanks to a few providers such as Tide and Zempler which carry out no credit checks when you apply.
How to compare business bank accounts for discharged bankrupts
You need to look for business accounts that can be opened without credit checks, or ask your bank about so-called “basic” accounts. Here’s what you should consider when comparing options:
Fees. Some dedicated business accounts for people with bad credit might be more expensive, but they are not necessarily your only option, so it’s worth comparing a few to try and find a cheap one.
Limited choice. The range of accounts, features and perks available to you will inevitably be limited, so you might not be able to afford to be too choosy.
No credit options. Business accounts that can be opened without a credit check usually don’t include an overdraft facility. Don’t expect a business loan or a credit card offer either.
Brokers. When looking for business accounts for people with poor credit, you will likely come across brokers that will offer to take care of it for you in exchange for a fee. While that’s certainly an option, it will be more expensive, so make sure you’ve exhausted the alternatives first.
Ask about rebuilding your credit rating. If you can, it’s worth asking the bank you are considering about ways to rebuild your business credit rating. It may not be possible at the moment, but for example, will it at some point consider offering you some kind of overdraft facility?
Budgeting, invoicing, accounting. The best business accounts come with extra tools and features that will help you run your business. These can include features that will help you categorise your business expenses, integration with existing accounting software, and invoice service.
Using cash? Business accounts with no credit checks are often digital-only, so what if you frequently need to deposit cash? While it’s less than ideal, it’s not the end of the world. Tide, for example, allows you to deposit cash on your business account at the Post Office, in exchange for a pretty reasonable fee.
Pros and cons of opening a bank account as a discharged bankrupt
Basic high street bank accounts may still be an option. Once you’ve been discharged and are no longer on the Insolvency Register you may be able to get basic current accounts from a handful of high street banks.
You may be able to get an online only-bank account Digital-only banks don’t tend to check your credit record when you apply for an account.
Choice of accounts will be limited. Even after you’ve been discharged from bankruptcy, your choice of bank accounts will still be limited compared to a customer who has not been declared bankrupt.
Limits on what you can do with your account. It’s likely your new bank account will be more basic, with no overdraft facility, smaller daily ATM withdrawal limits than previously, and you most likely will not be able to get a cheque book.
Bottom line
While your banking options will be limited as a discharged bankrupt, you should still be able to access basic banking services. This is essential in order to continue receiving your salary and paying your living expenses and regular bills.
While being declared bankrupt can be a traumatic experience, once you’re out of the other end of the process you’ll be able to start rebuilding your financial life. Getting a bank account can be the key starting point to improve your credit report. The longer you’re able to stay out of debt and use your account properly, the easier it will become to gain access to services that will require you to have a strong credit file.
Frequently asked questions
If the account is with a fully licensed bank, it will be covered by the FSCS, which means that your deposits are protected up £85,000. If you are looking at an account from a provider that is not a bank, make sure it is registered with the Financial Conduct Authority through an electronic money licence. This means that your money is held in a so-called “segregated account”, that the company cannot lend it out, and that even if it were to go bust, your money could not be used to pay its debt. That’s the case for Revolut in the UK, for example.
According to the charity Citizens Advice, some banks may let you keep using your existing account, but this may only happen after they’ve frozen it for some time while they speak to the official receiver. If you want to keep using your existing bank account, you should ask your bank whether this is possible. Bear in mind that they don’t have to say yes.
This will ultimately depend on how quickly you can improve your credit file. As described above, it usually takes six years for bankruptcy to be expunged from your credit history. Until that point, it’s likely that any applications you make for a regular current account will either be refused or accepted with restrictions, particularly around your ability to get an overdraft.
You will need to start practically from scratch in proving that you are a reliable borrower. A good way of starting is getting a credit card designed to help you build your credit, regularly using it to borrow very small amounts, and always paying the bill on time. On this page we’ve put together some more tips to improve your credit score.
To put it simply, you only need to tell the official receiver about any new bank account you open after being declared bankrupt if they specifically ask you for that information. Otherwise, you don’t need to volunteer it yourself. But, you will need to tell the official receiver about any money in your account that is more than you need for reasonable living expense. This is because they can claim some or all of the extra money to pay your creditors.
Although your name will be removed from the Insolvency Register three months after your bankruptcy is discharged, bankruptcy will usually stay on your credit file for six years. According to credit reference agency Experian, you will usually have to disclose your bankruptcy when applying to borrow more than £500 during this time.
Have a look at this page: we’ve put together a few options and some more advice for you.
As long as your business account is with a fully licensed bank, it will be covered by the FSCS, which means that your deposits are protected up to £85,000. If you are looking at an account from a provider that is not a bank, make sure it is registered with the Financial Conduct Authority through an electronic money licence. This means that your money is held in a so-called “segregated account”, that the company cannot lend it out, and that even if it were to go bust, your money could not be used to pay its debt.
Banking scores
★★★★★ — Excellent
★★★★★ — Good
★★★★★ — Average
★★★★★ — Subpar
★★★★★ — Poor
Finder scores, in blue, are based on our expert analysis. We also show reviews from users, where we've received more than 10, with a score in yellow. We gather more reviews from customers every year in Finder's customer satisfaction survey.
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Valentina Cipriani was a writer at Finder UK. She wrote news, features and guides about banking and credit cards, helping people to improve their financial lives. She holds an MA in International Journalism. See full bio
You can open and use a Monese account in the UK and across Europe. We round up the fees and features of this app-based current account.
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