Check If You Qualify

I recently filed for sequestration, how am I supposed to manage without a bank account?

Thomas McKay - Updated - 26th January 2024 - 2 minutes to read

When you enter sequestration you’re able to finally escape the debt spiral, but you must also adjust to a new way of existing financially. Running a bank account and paying bills by direct debit are probably second nature to most of us, but when you’re bankrupt you may not be eligible to hold a bank account at all.

What happens to your bank account in sequestration?

When a customer becomes bankrupt, banks naturally want to protect their own interests and avoid liability for money withdrawn that should have been paid to creditors. For this reason your bank account is likely to be frozen and you’ll be unable to take any money out - the trustee typically claims any credit balance in the account as part of your estate. Further problems arise if the account is jointly held. Direct debits and standing orders might be missed, and the joint account holder may not be able to access their wages or other payments.

Debt Calculator

Get a rough indication of what your monthly repayments might be under each of our different debt solutions.

How can I prepare in advance for sequestration?

Prior to filing for sequestration it’s advisable to set up a new current account for yourself, and another for your partner or spouse if you hold a joint account. This allows them access to their own funds, and set up direct debits for household expenses if necessary. You wouldn’t be able to operate an overdraft facility on your own new account, however, as strict rules and regulations are in place in this regard, but it would allow your wages to be paid in by your employer.

Basic bank accounts for bankrupts

A basic current account could provide a debit or cash card and potentially allow for electronic payments to be made, subject to available funds. It’s not profitable for banks to offer accounts with no overdraft or credit facilities, however, so you may need to shop around for an account with these limited features. But what if you can’t find a bank that offers a basic current account? How do you deal with the situation when your financial affairs still need to be managed?

How can I manage without a bank account in sequestration?

Post Office Card Account If you can’t open a bank account whilst your bankruptcy order is in place, you may be able to open a Post Office Card Account. This is particularly useful if you receive Department for Work and Pension benefits, tax credits, and child benefit payments, as they can be paid in directly. This is essentially a cash-handling account, and services are only available at Post Office branches, although the contract between the Post Office and DWP is ending in 2021. The DWP do intend to put in place an ‘alternative payment service’ for those ineligible to open a bank current account at that time, however. Credit unions It would be worthwhile researching credit unions in Scotland to check whether any offer basic current accounts for people who have entered sequestration. Although account features vary between credit unions, they typically allow you to pay in wages, benefits, and tax credits electronically. You may also be able to set up direct debits and standing orders, withdraw cash over the counter or from a cash point, and pay money in over the counter. Pre paid card accounts Pre paid card accounts work like ‘standard’ current accounts but you can only withdraw the money that’s in your account.  You can pay in your wages and benefits, set up direct debits, and there’s no credit check on account opening. Some of these accounts attract a number of fees, however, including:

It is possible to manage without a bank account when you’re in sequestration, but it always helps to plan in advance. Being aware of the limitations of bankruptcy is the first step, and can guide your actions in dealing effectively with the inevitable financial issues you experience in your daily life. If you have filed for sequestration and would like more guidance on how to manage without a bank account, our experts at Scotland Debt Solutions can provide reliable independent advice. We have a long track record of helping Scottish residents to escape debt, and can offer you a free same-day consultation at one of our network of offices throughout Scotland.

facebook colour icon twitter colour icon linkedin colour icon messenger colour icon whatsapp colour icon email colour icon
Thomas Mckay

Thomas McKay

Partner

Other Articles

Can I borrow money whilst I’m in a Trust Deed? Can I Borrow Money

Can I borrow money whilst I’m in a Trust Deed?

Borrowing money when you’re already deeply in debt requires careful consideration, and consultation with your trustee, as there are various factors associated with further borrowing in this situatio...

Your guide to getting a mortgage after a Trust Deed Guide to get a mortgage

Your guide to getting a mortgage after a Trust Deed

If you’re about to be discharged from a Trust Deed, you may be wondering to what extent your ability to obtain a mortgage has been affected.

What is an inhibition court order in Scotland? Court Order

What is an inhibition court order in Scotland?

If you’ve lost your job, state benefits and tax credits can provide vital financial support to see you through this tough time and help you avoid taking on too much debt while you look for more work...

About

Why Choose Us

Usp Discussion

Speak Direct With

A Qualified Adviser

Headset

We Don't Operate

Call Centres

Usp Location

5 Offices in Scotland

National Coverage

Usp House

Ask us About

Home Visits

Usp Award

Fully Regulated Advisors

From a Reputable Firm

Usp Hand Heart

Helping Scots Get

Out of Debt Since 1989

We'll give you a call

Our Scottish based team can help advise you on your debt problems.

Here at Scotland Debt Solutions we take your privacy seriously and will only use your personal information to contact you with regards to your enquiry. We will not use your information for marketing purposes. See our Privacy Policy.

Tools

Useful Tools

Personalised Debt Report
Usp Planner

Personalised Debt Report

Our personalised debt report will help you better understand your financial position and see where your money is going.

Debt Report
Instant Scheduled Call & WhatsApp
Headset

Instant Scheduled Call & WhatsApp

Arrange a call with an expert advisor at a time to suit you or contact our team via WhatsApp for immediate help and advice.

Arrange Callback
Find a Local Office
Usp Signpost

Find a Local Office

We have five offices located across Scotland. Find your nearest one here.

Find an Office

OUR SERVICES

We can help you with...

Sequestration

Sequestration

Sequestration is the Scottish version of bankruptcy and may be suitable for you if you do not have the money to pay back your debts

Find out More
Trust Deeds in Scotland

Trust Deeds in Scotland

A Trust Deed involves making a monthly contribution to your debts for up to four years. After this time any remaining debt included in the Trust Deed will not need to be paid.

Find out More
Debt Arrangement Scheme (DAS)

Debt Arrangement Scheme (DAS)

A Debt Arrangement Scheme (DAS) lets you pay off your debt through a series of manageable instalments over a reasonable length of time.

Find out More
Business Debts
Icon Briefcase

Business Debts

Whether you are a sole trader or a limited company director, we can help you work through your current financial problems including money owed to HMRC

Business Debts

Our Insolvency Practitioners are regulated by ICAS or the IPA and our firm is authorised and regulated by the Financial Conduct Authority

Fees and Information: There are fees associated with our services. These will be fully explained before entering into any of the personal debt solutions referred to on this website. Full details of our fees and how these are charged are fully explained to you prior to you committing to any particular service.

ICAS Insolvency Practitioners