How bankruptcy affects your assets and bank account


If you are made bankrupt a trustee will take control of all your assets.

You must disclose the following items to the trustee: 

  • tools, vehicles and other equipment you need in your employment or business
  • clothing, household equipment and other basic items your family need (based on allowable outgoings/expenses determined by the Insolvency Service)

The trustee may let you keep these items unless they can be replaced with a suitable alternative.

Disposal of assets

The trustee will take control of all your other assets. They will dispose of them and use the money to pay your creditors. Some of the money raised may be used to pay the insolvency practitioner's fee if one has been appointed.

Recovering assets

The trustee may apply to the High Court for an order restoring property to them if you disposed of it in a way that was unfair to your creditors. For example, if you transferred property to a relative for less than it was worth.

Any property you obtain while you are bankrupt may also be claimed by the trustee.

Bank accounts

You must give the trustee your bank cards, cheque books and credit cards. Your accounts will be frozen but the trustee may release:

  • any money you need urgently to live on - for example, to buy food
  • your spouse or partner's share of any money in a joint account

After the bankruptcy order has been made you may open a new bank account. You should tell the bank that you are bankrupt.

Life assurance

The trustee may claim any interest you have in a life assurance policy. The trustee may be entitled to sell or surrender the policy and collect any proceeds on behalf of your creditors.

If the policy is held in joint names you should contact the trustee to discuss how the policy should be dealt with.

Developed with:
  • Department for the Economy