Should I Keep my Bank Account in a Bankruptcy?

Contemplating Keeping Your Bank Account During a Bankruptcy Procedure in Canada?

Navigating through the financial distress of bankruptcy or a consumer proposal in Canada? One of the many questions you may be asking is “Should I Keep my Bank Account in a Bankruptcy in Canada?” Here’s an in-depth guide that can help you make an informed decision.

Evaluating Your Banking Options During Bankruptcy

Licensed Insolvency Trustees in Canada usually recommend that you set up a new bank account prior to declaring bankruptcy or filing a consumer proposal. Preferably, this should be a bank with which you have never had a credit card or availed any services. Also, ensure to redirect any regular deposits such as salary, to the new account before the bankruptcy procedure commences.

The Reason Behind Opening a New Bank Account

You might wonder why you should bother with the inconvenience of changing banks, especially if you are comfortable with your current bank. The reason is simple: creditor protection. By keeping your bank account during bankruptcy, you run the risk of creditors withdrawing money from your account.

If you have a credit card from the same bank where you have your account, it’s relatively straightforward for the card company to debit your account if you miss your payment deadline. Even other banks can debit your account if you have granted them permission.

Therefore, it’s advisable to switch to a new bank account to protect your funds. Even though transferring all your automatic payments and deposits to a new account may seem tiresome, it’s a step towards gaining better control over your finances.

Your Rights as a Bank Account Holder

As a citizen of Canada, you have certain rights safeguarded by the Bank Act and the Bankruptcy and Insolvency Act. These include:


  • The right to open an account at any Canadian bank, irrespective of your bankruptcy status.
  • The right to retain your bank account during bankruptcy, as long as it’s in good standing and there’s no history of illegal activities.
  • The right not to be harassed or have your money taken by creditors once you’ve declared bankruptcy or filed a consumer proposal.

These rights are a crucial part of financial protection during bankruptcy. However, navigating through the intricacies of bankruptcy can be challenging. Therefore, it’s advisable to consult a licensed trustee for personalized advice. These trustees are available in multiple locations like Toronto, Calgary, and Montreal.


Deciding whether to keep your bank account during bankruptcy can be a complex decision, requiring a careful evaluation of multiple factors. It’s advisable to consult with a licensed trustee to understand your rights and options better. This decision will significantly impact your financial stability during and after the bankruptcy process. Therefore, it’s crucial to make a well-informed decision based on your specific circumstances.

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