IF THE ACCOUNT IS A JOINT ACCOUNT AND ONE ACCOUNT HOLDER IS DECLARED BANKRUPT THE BANKS WILL TREAT THE ACCOUNT AS IF BOTH HAVE BEEN DECLARED BANKRUPT AND THIS WILL REFLECT ON YOUR CREDIT REFERENCE FILES
Additionally, if there is a debt on a joint account, the person going bankrupt will not be held liable for the debt, but the other account holder(s) will
WHERE AT ALL POSSIBLE CLOSE ANY JOINT ACCOUNT BEFORE GOING BANKRUPT, ESPECIALLY WHERE ONLY ONE PERSON IS GOING BANKRUPT
ONE FINAL POINT, ALL BANKS ACCOUNTS MUST BE DECLARED ON YOUR STATEMENT OF AFFAIRS, EVEN IF THEY ARE IN CREDIT - THERE ARE NO EXCEPTIONS TO THIS, AND THIS APPLIES TO ANY OLD DORMANT ACCOUNT (ACCOUNTS YOU HAVE BUT DO NOT ACCESS OR USE) - THE ONLY WAY THAT YOU DO NOT HAVE TO LIST THEM IS, IF THEY HAVE BEEN FORMALLY CLOSED FOR MORE THAN TWO YEARS
IF YOU HOLD A LASTING POWER OF ATTORNEY (LPA), ENDURING POWER OF ATTORNEY (EPA) OR COURT APPOINTED POWER OF ATTORNEY (CAPA) OVER ANY ACCOUNTS FOR ANY PERSON YOU WILL NEED TO DECLARE THESE ACCOUNTS, UNLESS THERE ARE EXCEPTIONAL REASONS (SUCH AS BEING THE ONLY CAPABLE RELATIVE) THE LPA/EPA/CAPA WILL BE REVOKED FOR THE DURATION OF THE BANKRUPTCY
Bankruptcy and Bank Accounts.
Once you are declared bankrupt
Once you have been declared bankrupt, ALL accounts belong to the OR, so if you draw money out then you are committing an offence under the IA86.
The OR will inform the bank (or building society) if he has any interest in the account, until he has informed them the accounts belong to the OR not you:
If the OR has an interest in an account
If he has and you attempt to use the account you will be committing a criminal offence.
It is highly possible that the account will show on line as being fully operational, and it may be that it is, but if you use it then you are in deep poo-poo.
The majority of the time the account will be ‘frozen’ that is you can pay money in but can’t take any money out.
If this has happened and you have had benefits paid in then you must obtain written authority from the OR to ‘ask’ for this money back from the bank, some will, some will fight you like hell.
The majority off account s the OR has interest in are those in debt and those with money in
If the OR hasn’t any interest in your account
First things first – he OR wont tell you unless you specifically ask!!
If the OR notifies the bank or Building society that he has no interest in the account, then the account is released back to the bank, NOT YOU.
Depending on the terms and conditions of the account will depend on if you are allowed to keep the account, only the bank will be able to tell you.
MOST banks and building societies stipulate in their T&C’s that they will not provide banking facilities, unfortunately most banks are slow to carry out these processes, so it is again possible that the account shows as being fully operational, which very often means the account will show as being fully active, when in reality it is not!
After you have been discharged
This is when the majority of us will see changes, these account suddenly vanish from you account details, as they are no longer classed as being in debt and the bank no longer holds them open for inspection by the OR
Who can a bankrupt open an account with
The following are listed with the FSA as allowing un-discharged bankrupts to have accounts (or rather to open accounts):
Barclays (Cash Card Account)
Nationwide Basic Flex Account is no longer available
Co-operative Bank (Cash Minder Account) is no longer available
You can apply to open any of the above account immediately after you have been declared bankrupt, there is no need to wait for permission from the Official Receiver.
All other basic account stipulates that you must be discharged from bankruptcy, and then they will look at you on a case by case basis!!
Benefit Payments into bank accounts
If you receive benefit payments into your bank account, then is it possible that once you are bankrupt the bank will not allow you access to the payments until they have had written confirmation from the OR that the account is of no interest to the OR, and this can take a couple of weeks.
About a month before going bankrupt, you can either open post office benefit account or arrange for the payments to be made by giro for a few weeks (DWP will do this and you can tell them why)
You need to do this about a month before your bankruptcy date if you can
Payments out of your account (Direct Debits, Standing Orders, etc
Make sure you cancel these with your bank before going bankrupt, and it is better if you cancel them in writing (rather than by phone or over the internet), as there have been a few cases where the bankrupt has been held liable for payment taken from an account after the bankruptcy date.
You need to aim to do this 14 - 21 days before your bankruptcy date to allow time for the bank to get their act together and stop them.
Updated by Tim on 17th September 2012
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Abbreviations used in DQF
My advice is guidance only, if you want the law then consult a lawyer!
(c) All Spelling mistakes are my own design, infringement of them may result me sulking!