What the Official Receiver Does with your bank account in bankruptcy

If you are going bankrupt, one of the very first questions that are asked by an advisor are what happens to their bank account, if it is worth opening a basic bank account prior to declaring bankruptcy, and if all accounts need to be disclosed. It is internal guidance within the Insolvency Service that the official receiver should notify any banks where the bankrupt held an account as soon as practically possible (and certainly within five working days of the bankruptcy order) and should do so as soon as he/she obtains the bank's full address and account numbers.

The Statement of Affairs asks for details of all bank accounts which the bankrupt has and also any which are jointly operated.

Many people now have internet or telephone only accounts and the OR will not seek passwords, pin numbers or security information and also will not attempt to gain access to it.

The Official receiver maintains two distinct letters for writing to a bank. They are available for staff on its internal document production system. Each letter provides an option for dealing with the bank account and will be dependent on how the Official Receiver views the account.

The first type of letter will notify the bank of the bankruptcy order and should be used where the official receiver is content for the account to be closed. The OR can then also request any or all of the following:-

• Where there is a credit balance, asking for the balance to be remitted to the official receiver.
• Where no further information is required from the bank.
• Where there are further standard questions requiring an answer.

A second letter is available for use in cases where the official receiver is content for the bankrupt to continue to use the account, subject to bank policy. It is most likely that this will occur when the bankrupt's regular income is paid into the account concerned. There are options available to tailor this letter: -

• Where there is a credit balance on the account but the official receiver is happy for the funds to be released to the bankrupt.
• Where there is a credit balance on the account and the official receiver requires all, or part of the balance remitted to him/her.

It is not the intention of the OR to get every account closed and dependent on the bank in question it is not necessary for a bank to automatically close a simple account that is working effectively.

The account will likely be frozen automatically and can take up to five days to unblock after the event. This can cause problems if it coincides with direct debits coming out of the account, or access are needed to funds.

Where the official receiver is realising a credit balance on a bank account, the Insolvency Service approach is for the OR to take a practical approach. The cost of the efforts made should not be more than the amount realised. If the balance (or sum of balances with one bank) which the official receiver is seeking to realise is £50 or less, a simple letter should be sent asking for the balance, perhaps a telephone call to follow up and then no more than one further follow-up letter. Where the amount to be realised exceeds £50, the official receiver should use his/her discretion as to the effort required from his/her staff.

In my opinion you should not hide any bank account from the Official Receiver but people who have been bankrupt have done so and then advised the OR about it and as it was simple account only with no money, he has allowed it to remain untouched. This may not happen in every case, and each situation will likely be different.