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Bankrupts Being Refused Basic Banking

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Bankrupts being refused basic banking

Banks are refusing to offer basic bank accounts to those who have filed for bankruptcy and treating them the same as those who have a record of committing fraud.

Locked out: if you have recently filed for bankruptcy, you will find it difficult to get a bank account for your wages.

Out of the 17 High Street banking brands that offer basic bank accounts, only two – Barclays and the Co-operative Bank – offer them to people who have filed for bankruptcy in the previous 12 months, according to the City watchdog, the Financial Services Authority.

The rest treat 'undischarged bankrupts' – those who have yet to be discharged from their bankruptcy, which usually occurs after one year – the same as those who have a 'record of fraud' and refuse to offer them an account.

Two organisations, NatWest and Nationwide Building Society, even refuse to offer basic accounts to those who have filed for bankruptcy in the previous six years.

A bankrupt is usually freed from all their debts after one year, but the bankruptcy remains on their credit file as a warning to lenders for a further five years.

The exclusion of some of the UK's most financially vulnerable people from the necessity of a bank account exists despite a Government-backed 'universal banking' initiative in 2003, which was launched to help the financially excluded gain a foothold in society.

A spokeswoman for the British Bankers' Association said banks made this move after deciding it was too risky to offer these people a bank account – even one without an overdraft facility.

She said: 'It is to do with legal liability. Funds can still be clawed back by creditors if a bankrupt is undischarged. If creditors take back whatever money goes into an account, then direct debits may push it into a temporary overdraft, even if there isn't one available on the account.

'Therefore, some banks have taken the view there is too much risk involved.'

However, Jessica Bown, from debt advice website Talkaboutdebt.co.uk, believes banks should revise their practices and stop forcing people to remain part of a 'banking underclass'.

She said: 'Since the Government introduced basic bank accounts, over 500,000 people have fallen into bankruptcy. For most this is a last resort, accompanied by a feeling of shame that is perpetuated because they are refused access to even the basic banking facilities necessary for modern life.

'By excluding them in this way, the banks are effectively treating them like criminals and making it harder for them to pick up the pieces of their lives and improve their financial situations.'

Basic bank accounts are designed for people who may not meet the eligibility criteria for a standard current account or who want to ensure they cannot go overdrawn on their account. These accounts usually do not offer an overdraft or cheque book, but allow pensions and benefits to be paid directly into the account, direct debits and cash machine withdrawals.

There are two main types: accounts with the 17 banks mentioned above can be accessed directly or over-the-counter at Post Offices nationwide.

Also since 2003, 3.5m basic bank accounts accessible through Post Offices have been opened, half of which are estimated to be for customers with no previous banking relationship.

Of course there was a moral hazard present with Gordon Browns lax policies and banks preying on the weak and downtrodden, but for f-sakes, why are people are so bloody stupid about money and debt in Britain?

You won't find any sympathy from myself and most of the forum here. The reason that most recent bankrupts are just that, is fraud, right Eric?

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Bankrupts being refused basic banking

Of course there was a moral hazard present with Gordon Browns lax policies and banks preying on the weak and downtrodden, but for f-sakes, why are people are so bloody stupid about money and debt in Britain?

You won't find any sympathy from myself and most of the forum here. The reason that most recent bankrupts are just that, is fraud, right Eric?

Yes, most people being bankrupted at the moment have been defrauded by the bankers.

Pretend to lend, foreclose, get real stuff.

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She said: 'It is to do with legal liability. Funds can still be clawed back by creditors if a bankrupt is undischarged. If creditors take back whatever money goes into an account, then direct debits may push it into a temporary overdraft, even if there isn't one available on the account.

'Therefore, some banks have taken the view there is too much risk involved.'

Stupid banker....they can bounce the call on funds not available. der!

and creditors take money? more ********....it would be the OR that takes the money and that would be with notice to both the bank and the bankrupt.

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Weasel words from the banks. They could offer basic accounts and bounce all cheques and DDs that would take the account overdrawn quite easily, but they couldn't apply their usual charges to the bankrupt so they're not interested.

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I miss Solvent Celt. I wonder what became of him. For newer members he was an insolvency practitioner or OR and was well versed in these matters.

One classic post of his that I remember was that a house in N/E was not an asset so was outside the scope of the OR. If you could keep paying your mortgage during the bankruptcy you were home and dry because 'all' debts are written off.

Something like that anyway.

p-o-p

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Weasel words from the banks. They could offer basic accounts and bounce all cheques and DDs that would take the account overdrawn quite easily, but they couldn't apply their usual charges to the bankrupt so they're not interested.

Yes, absolutely pathetic.

She said: 'It is to do with legal liability. Funds can still be clawed back by creditors if a bankrupt is undischarged. If creditors take back whatever money goes into an account, then direct debits may push it into a temporary overdraft, even if there isn't one available on the account.

'Therefore, some banks have taken the view there is too much risk involved.'

An account with no direct debit or standing order instructions accepted would remove the risk. So the problem is....

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Should have done the same with Rubbish B of S, Hell Bent O of S, Northern Crackhouse. All should have had their banking facilities withdrawn and their businesses turned over to more competently run institutions.

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Yes, absolutely pathetic.

She said: 'It is to do with legal liability. Funds can still be clawed back by creditors if a bankrupt is undischarged. If creditors take back whatever money goes into an account, then direct debits may push it into a temporary overdraft, even if there isn't one available on the account.

'Therefore, some banks have taken the view there is too much risk involved.'

An account with no direct debit or standing order instructions accepted would remove the risk. So the problem is....

...sour grapes

:lol:

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Looks like an attempt to shore up bankruptsy's image as a bad thing to do. Maybe they can see a lot more of them coming down the pipe and wish to discourage the option?

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This has always been the case, discharged bankrupts have only ever had access to one or two banks and only their very basic accounts. Nothing to see here. :P

Ironic really though; bankrupt, nationalised banks refusing accounts to bankrupt citizens who have bailed them out

:huh:

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I am far too Machiavellian by nature; for able bodied individuals that is.

I'd like to see these burdens on the state taken out of everyday society and be forced into hard labour in order to earn the right to return to the fold as a citizen. Yes there are exceptions to the rule, but for most this is due to irresponsibility and abuse brought about by our stupid sense of entitlement here.

But oh well, I live in the biggest council estate in the free world, called the United Kingdom.

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Yes, most people being bankrupted at the moment have been defrauded by the bankers.

Pretend to lend, foreclose, get real stuff.

Spot on Injin, the fact that bankruptcy awaits everyone seems to escape most people. For those who think they are safe because they are currently solvent, guess what it is a temporary situation. Why, your government has put every citizen into debt for such a large amount that it will never be paid off, you, as a taxpayer are heading towards bankruptcy.

You may even get there quicker if you fall ill, lose your job, or even divorce. Guess what, it's not only other people that go bankrupt.

Borrowing money from a bank isn't the same as borrowing it from a mate, your mate loses some purchasing power whilst you have their money. But banks, and this is the clever bit, don't lend you any money, and that is because they have none. They merely acknowledge the existence of your debt.

Denying someone basic banking in this current socio-economic situation is the modern equivalent of being banished from the village.

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I am far too Machiavellian by nature; for able bodied individuals that is.

I'd like to see these burdens on the state taken out of everyday society and be forced into hard labour in order to earn the right to return to the fold as a citizen. Yes there are exceptions to the rule, but for most this is due to irresponsibility and abuse brought about by our stupid sense of entitlement here.

But oh well, I live in the biggest council estate in the free world, called the United Kingdom.

:lol:

Hangings too good for them.

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I am far too Machiavellian by nature; for able bodied individuals that is.

I'd like to see these burdens on the state taken out of everyday society and be forced into hard labour in order to earn the right to return to the fold as a citizen. Yes there are exceptions to the rule, but for most this is due to irresponsibility and abuse brought about by our stupid sense of entitlement here.

But oh well, I live in the biggest council estate in the free world, called the United Kingdom.

You really need to look beyond that narrow programming of the modern media. People poorer than you are not the problem, it your lords and masters that are the cause. People always look down the heirarchy for scapegoats.

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but more importantly.... where do these people get their benefits paid into?

Post Office.

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Spot on Injin, the fact that bankruptcy awaits everyone seems to escape most people. For those who think they are safe because they are currently solvent, guess what it is a temporary situation. Why, your government has put every citizen into debt for such a large amount that it will never be paid off, you, as a taxpayer are heading towards bankruptcy.

You may even get there quicker if you fall ill, lose your job, or even divorce. Guess what, it's not only other people that go bankrupt.

Borrowing money from a bank isn't the same as borrowing it from a mate, your mate loses some purchasing power whilst you have their money. But banks, and this is the clever bit, don't lend you any money, and that is because they have none. They merely acknowledge the existence of your debt.

Denying someone basic banking in this current socio-economic situation is the modern equivalent of being banished from the village.

Not everybody is in debt you know, and there are still hedges available to the average punter.

You just have to be prepared and willing to be as sneaky and underhanded as the government is.

That is all I have to say about that.

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You really need to look beyond that narrow programming of the modern media. People poorer than you are not the problem, it your lords and masters that are the cause. People always look down the heirarchy for scapegoats.

Spot on.

Not everybody is in debt you know, and there are still hedges available to the average punter.

You just have to be prepared and willing to be as sneaky and underhanded as the government is.

That is all I have to say about that.

:lol:

So discharged bankrupts are scum who need to be put to work in the fields to earn their way back into society, and someone who is "sneaky and underhand" is.......

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I think most of the banks should be bankrupt so its a bit hypocritical. There is no risk provided you don't offer credit. It seems unless the banks can force you into debt they are not interested.

I suspect bankrupts will be pushed into using prepaid (top up) debit cards and Paypal. Actually they are not a bad solution and its impossible to run up a debt or get fleeced on bank charges. If there is no money on the card, the bill simply isn't paid.

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but more importantly.... where do these people get their benefits paid into?

Barclays and Co-Op bank, as per the OP. There is also a standard Post Office account for benefits to be paid into, AFAIK.

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Weasel words from the banks. They could offer basic accounts and bounce all cheques and DDs that would take the account overdrawn quite easily, but they couldn't apply their usual charges to the bankrupt so they're not interested.

Spot on!

They want the ability to steal at will from all their 'customers'.

There is no reason whatsoever not to offer a credit balance only account except that they can't make money out of it, whilst taking £750billion from the taxpayer with the other hand.

I would also agree that they are sh1tting themselves that just as credit card use became endemic within a few short years, so could bankruptcy. Hence they're perpetuating the meme that unless you are in debt to a bank you're a worthless piece of sh1t.

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Spot on.

:lol:

So discharged bankrupts are scum who need to be put to work in the fields to earn their way back into society, and someone who is "sneaky and underhand" is.......

Debtors prisons were once very common.

...sneaky and underhanded...like my moniker?

Aquiring assets and keeping them safe verus taking on debt and being unable or unwilling to repay does really need to carry a more severe stigma.

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She said: 'Since the Government introduced basic bank accounts, over 500,000 people have fallen into bankruptcy. For most this is a last resort, accompanied by a feeling of shame that is perpetuated because they are refused access to even the basic banking facilities necessary for modern life.

no, the feeling of shame is perpetrated due to taking money from peoploe and never paying it back. This is not far off stealing.

'By excluding them in this way, the banks are effectively treating them like criminals and making it harder for them to pick up the pieces of their lives and improve their financial situations.'

they ARE effectively criminals? what's wrong with this?

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no, the feeling of shame is perpetrated due to taking money from peoploe and never paying it back. This is not far off stealing.

they ARE effectively criminals? what's wrong with this?

Oh christ, where to start :rolleyes:

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