Life after bankruptcy requires a good relationship with at least one bank, to do that you’ll need to open a bank account. But depending on your past bank account history, you could be denied. Let’s take a look at how you can open a bank account after bankruptcy and what you can do to protect your banking relationship.
What’s A Good Bank Account?
Not all bank accounts are created equal. If you want to build a positive banking relationship you’ll need to find a bank that has all the characteristics of a “good bank.”
- FDIC insured. Checking and savings accounts are a great way to keep your money safe, but make sure that any bank you do business with is FDIC insured. If your bank collapses or has some other major financial problem, FDIC insurance will protect your money up to $250,000 per account.
- Low fees. Choose a bank that has reasonable fees for overdrafts, bounced checks, monthly maintenance surcharges, and ATM usage. You’ll want to minimize how much money you’re spending after bankruptcy so see if the bank is willing waive their “monthly maintenance” fee if you keep a minimum balance or have direct deposit. Many banks offer “no fee” checking accounts to anyone who has their paycheck directly deposited into their account.
- Customer service. The best banks make it easy to contact someone when there’s a problem. Try to choose a bank that’s available when you are. Does the bank have teller service in your area? Are they open after business hours and on weekends? A good bank will have customer service agents available via phone, email, and at their branch offices.
Can A Bank Refuse To Open An Account?
Banks have the right to deny you an account if you have failed to meet their credit standards. Fortunately, a bankruptcy alone usually isn’t enough to trigger a denial. However, if you’ve had problems with bank accounts in the past you might be denied an account. Here’s what you need to know:
- Bank history report. Many banks report data about their relationship with you to data collection systems such as ChexSystems. If your bank account was closed due to unpaid overdrafts, bounced checks, or fraud, it’s very likely that you have a negative mark on your bank history report. Under the Fair Credit Reporting Act (FCRA) a bank account that was closed due to your mismanagement may remain on your record for up to 7 years.
- You are entitled to an explanation. If you’re denied a bank account, the bank is required to disclose why you were denied. This is important because it will point you in the right direction to fix any inaccurate or outdated information.
- You can remove inaccurate information. Just as you have the right to dispute inaccurate information on your credit report, you also have the right to dispute information reported by banks. You can contact the two largest bank data collection agencies ChexSystems or Early Warning Services and dispute any incorrect information. You also have the right to request a free report from these agencies once a year.
- Sometimes you get a second chance. Many banks have “second chance” programs where they allow a person with a troubled banking history to get an account. However, these second chance accounts sometimes have restrictions such as having no debit card.
Pre-Paid Debit Cards
One of the ways that post-bankruptcy filers move forward with their fresh financial start is by using a pre-paid debit card. These cards are especially convenient if you don’t have a traditional bank account, but they’re also helpful for post-bankruptcy filers trying to manage their discretionary spending.
Finding the right bank account is essential to your fresh financial start after bankruptcy.