What banks for bankrupts are there?
Many people are under the impression that declaring yourself bankrupt is a good way of getting out of financial trouble. In the short term, declaring yourself bankrupt will get rid of most of your existing debts, but in the long run declaring yourself bankrupt is very dangerous and very risky.
When you declare yourself bankrupt your credit rating will go through the floor, and no one is going to advance any funds. This means you will not get any sort of credit agreement of any kind, even the ones where almost anyone can sign up for such as mobile phone contracts and paying for insurance on monthly basis.
When you declare yourself bankrupt your banking arrangements go out the window and a bank account that offers debit cards, credit cards, check books, overdraft facilities etc. will be withdrawn and your bank account will be downgraded to the most basic of all bank accounts. Whether you consider this treatment right or wrong it really doesn’t matter since that is how you will be treated and there is nothing you can do about it. If you’re thinking changing banks will help, think again, as you will be refused for all bank accounts as you won’t get through the credit checks.
Fortunately, there are some bank accounts specifically designed for bankrupts including;
i) The basic bank account
The basic bank account, as its name suggests, is a “no frills” basic bank account which offers a limited number of features. This account allows you to have your salary and wages paid in to it, as well as making payments by standing order and direct debit. Some offer a debit card, although most don’t.
Some high street banks offer a basic account, but not all of them so you may not be able to find a branch that is right on your door step. Since most of your banking will be done in branch this could create a few more problems and increased costs in respect of travel and parking.
The basic account is the closest account to a current account an un-discharged bankrupt can have, although you may not qualify for it right away.
ii)The guaranteed bank account
As long as a person is over eighteen years old and can prove their identity they will qualify for a guaranteed bank account, so it is one bank account an un-discharged bankrupt can have.
When you open a guaranteed bank account there are no credit checks to go through, so this account has no credit facilities whatsoever. With a guaranteed bank account you get a one to one account manager, which should help you get back on the right track. With a guaranteed bank account there are no hidden charges, fees or interest. You will not get a credit card or debit card with a guaranteed bank account, however you can use a prepaid credit card instead of a conventional card should you wish.
Regaining your credit score and getting access to normal bank accounts is going to take a long time and a lot of hard work and effort once you have declared yourself bankrupt. It is a long road that will take hard work and dedication, and this is something most people are not made aware of before they declare themselves bankrupt.
Bankruptcy is the last resort
You should see declaring yourself bankrupt as the very last resort only and not rely on this as a way to get yourself out of financial trouble.
Bankruptcy can be avoided however you have to identify there are money problems and do something about them before they spiral out of control. Most people who declare themselves bankrupt had the opportunity to avoid the situation but decided to stick their heads in the snad for too long.
If you find yourself with financial difficulties you need to act immediately and sort out an affodable repayment plan.