Can I stay with my bank account if I have just been made bankrupt?

A new bank and new bank account may be best...

Please note that after a person has been made bankrupt by the court or filed bankruptcy they often panic wandering can they still stay with their same bank.

The answer to this is make an appointment with the customer services department at your bank prior to the bankruptcy order being made and see what they say.

Some banks can be helpful and other not so. Please note that it is always advisable to open a new bank account with a completely different bank just in case the banks freezes your account of exercises their right of set-off. Right if set off means banks have the right to move your money from different accounts around if they see they are not going to be paid.

The financial ombudsman service makes the following statements about “Banks Right of Set Off”

In the UK it would generally be expected a firm to use "set off" before giving the customer a reasonable opportunity to pay the debt. However, what is "reasonable" might depend on the customer and the history of the account. There would usually be an agreement that money held by a customer in one capacity can be used to pay debts owed by the same customer in a different capacity.

The basic position is that a bank has a right – but not a duty – to look at a bankrupts overall position and to "combine" the accounts held by the bankrupt individual. This is sometimes called a right of "set off" or a right to "combine" accounts. A bank has this as a general right, whether or not it mentions the right in the account terms. So, in the examples above, the bank can transfer money from an account that is in credit in order to make payments due on another account. But it does not have to do this.

Certain conditions must be met before the bank can exercise its right of "set off" in bankruptcy.

• the account from which the bank transfers funds must be held by the bankrupt individual who owes the firm money.
• the account from which the bank transfers the money – and the account from which the money would otherwise have come – must both be held with the same bank.
• the account from which the bank transfers funds – and the account from which the money would otherwise have come – must both be held in the same capacity by the customer concerned. So, for example, if Mrs C holds a savings account in her capacity as treasurer of a local society, the firm cannot take money from that account to pay Mrs C’s personal credit card bill that she normally pays from the current account she holds in a personal capacity.