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If you declare yourself bankrupt, it is likely that the bank account you are currently using will be frozen. We consider if you can open a new account and how to do this.

If you have serious personal debts that you cannot afford to repay, you may be considering bankruptcy. However one of the concerns many people have with bankruptcy is whether they will be able to have a bank account.

The answer to this question is yes. If you declare yourself bankrupt you remain in control of your day to day financial affairs and can have a bank account.

You will be expected to continue to manage your own money and your monthly living expenses payments.

As such you are allowed to have a bank account where you can receive your income and from which you can make your living expenses payments each month

However you need to understand how banking as a bankrupt person will work.

Can I keep the account I already have?

Generally speaking when you declare yourself bankrupt you will need to open a new bank account.

The accounts that you have been using up until the date of your bankruptcy will normally be frozen particularly if you owe them money or you have any savings accounts.

If you have an account with no overdraft facility you may be able to keep using it.

However, you should check with the bank first that they would be happy to keep the account open for you if you declare bankruptcy.

Your bank may prefer you move you on to a simple account called a card cash account.

A card cash account specifically does not offer any borrowing facilities but you can pay in wages and other income as normal, set up direct debits, standing orders and usually have a debit card.

When should open a new account?

The best time to open your new bank account is just before you declare yourself bankrupt.

This way you can have it up and running and start to use it so there will be no period without an account once your old accounts are frozen.

Most high street banks now offer simple bank accounts that they will be willing to keep open for you even if you go bankrupt. Two banks which seem to be particularly helpful at present are the Co-Op and Barclays.

Once you are speaking to someone at the bank, tell them that you intend to go bankrupt so they can open the right account for you.

Should I use a managed bank account?

Some companies offer a service called a managed bank account. This service can be useful if you have found it difficult to manage your money in the past.

Generally your account is split into two. Once your salary or other income is paid in, the amount you need to pay all of your know outgoings such as your rent or mortgage, council tax, utility bills and debt payments is moved automatically into a bills account.

The remaining money is made available for you to access to pay for your other living expenses such as food, clothing and petrol.

The advantage of this type of managed account is that you have peace of mind knowing that the money you need to pay your regular bills will always be available and you can never spend over your budget.

However, these types of accounts come with a price and normally cost £10-£20 a month.

As such, a managed account is really only a benefit if you truly believe you cannot manage your money yourself.

Financial independence

I you go bankrupt, you still maintain financial independence. This means that you remain in charge of managing your own money and you will need a bank account to do this.

However, you should be aware that you will probably not be able to keep the bank account open that you have been using in the past.

Planning for and opening a new bank account is therefore one of the important tasks to consider before going through the bankruptcy process.