Beyond that the position is a banking question rather than an insolvency one. The rules on refusing and closing accounts are worth knowing, because they are in your favour more often than this market suggests.

What is not published anywhere is how any individual bank behaves, and this page does not invent it. How sequestration works covers the process around this.

Not as a matter of law. Section 78(1) transfers your estate to the trustee, and no provision of the Act instructs a bank to do anything to your account.

What the Act requires instead

Section 86(9) requires the trustee, once aware of vested estate held by a bank, to serve a notice informing the bank of the sequestration and giving enough detail to identify you and the funds.

That is a notice, not an instruction to freeze. What the bank does after receiving it is the bank’s own decision under its own rules.

The subsection that proves the point

Section 86(8) says the trustee has no remedy against the bank for a banking transaction entered into before the bank received that notice, whether or not the bank was aware of the sequestration.

That subsection only makes sense because the account keeps working in the meantime. Section 86(10) then deems the notice received the day after it is sent.

What the law does and does not do

It is vested estate. Section 78(1) vests the whole estate of the debtor in the trustee as at the date of sequestration, and a balance is part of that.

Whose money is whose

Income you receive afterwards is reached through a contribution order rather than by the trustee taking your account. How a debtor contribution order is calculated sets out that assessment.

Timing your application around payday

Where the balance is at its lowest, there is least at stake on the day. That is a practical point to put to your money adviser rather than a rule you can rely on.

Emptying the account first is not the answer

The estate vests at the date of sequestration whatever the balance shows afterwards, and the Accountant in Bankruptcy’s guidance lists savings among the assets that may be realised.

Conduct before an award is also relevant to whether a bankruptcy restrictions order is made. That is a real risk rather than a theoretical one.

Not a basic bank account. The grounds for refusing one are a closed list, and insolvency is not on it.

What the list actually contains

Regulation 25 of the Payment Accounts Regulations 2015 makes refusal mandatory only where opening the account would be unlawful, and discretionary only where your conduct towards staff amounts to a public order or harassment offence.

A poor credit record, arrears, a default, an arrestment, a trust deed and a sequestration are all absent from it. There is no ground based on your credit file.

And a refusal has to be explained

Regulation 25(3) to (5) requires the institution to tell you the reason in writing and free of charge, in enough detail for you to understand it, unless giving it would be unlawful.

It must also tell you how to complain to it and about your right to complain to the Financial Ombudsman Service. Whether a wage arrestment affects getting a bank account goes through the basic account rules in full.

What the guidance tells debtors to expect

National Debtline says a trustee may allow you to open a new account, usually an instant access type with no cheque book, cheque card or overdraft facility.

That is the account most people in a sequestration end up with. It does everything a wage or benefit payment needs it to do.

Not a basic account, on the published grounds. An ordinary current account is a contract, and the notice rules changed in your favour in April 2026.

The rules, side by side

What changed on 28 April 2026

For a framework contract entered into on or after that date, regulation 51B of the Payment Services Regulations 2017 requires at least 90 days’ notice before termination takes effect.

The notice must explain the reasons in terms specific enough for you to understand them. For an earlier contract, regulation 51A keeps the two-month period.

Why the closure question is different from the arrestment question

A bank arrestment is diligence carried out by a creditor. A closure is the bank ending its own contract with you, and the two are governed by completely different rules.

Most of the confusion driving this question comes from merging them. Keeping them apart is what makes the answer usable.

The trigger is the date the contract was entered into

It is not the date of the closure. An account you opened years ago falls under the older period even if the bank closes it tomorrow.

Everything. No primary source establishes what any bank does after a sequestration, and this page is not going to guess.

What the two official sources say, in their own words

The Accountant in Bankruptcy says your bank may freeze or close your account and you may have to open a different one, and that it may still allow salary or benefits to be paid in.

mygov.scot says credit reference agencies give banks a daily list of new bankruptcies, and that your bank may freeze your account so you cannot withdraw money.

Both of those are may, and neither is a rule

Pages in this market turn them into how long a freeze lasts, how likely it is, and which banks do it. None of those claims has a source behind it.

So the useful step is asking your own trustee what will happen in your case. What a trustee in sequestration does covers what else to expect from them.

One piece of advice that is published

mygov.scot tells applicants to keep money for essential living costs available when they apply, in case an account is frozen, and to contact the bank with the award letter if it happens.

Banks find out through the register as well as through the agencies. Whether your sequestration is public explains that side of it.

Borrowing, rather than banking. The Act sets disclosure duties on credit and says nothing at all about holding an account.

The disclosure thresholds

Section 218(13) of the 2016 Act makes it an offence to obtain credit without disclosing your status where the credit is £2,000 or more, or of any amount where you already have debts of £1,000 or more.

Utility charges and council tax are left out of that £1,000 calculation.

An arranged overdraft is credit, which is why a basic account normally comes without one. The thresholds are written into the Act rather than set by your trustee.

Feature by feature

The creditor loses its advantage. Sections 24(6) and 24(7) remove the preference and pass the arrested estate to your trustee.

That is equalisation, not a refund

Funds arrested within the 60 days before the date of sequestration, or after it, go into the estate for the creditors as a body. They do not come back to your account.

Outside a sequestration a bank arrestment cannot touch the first £1,000 in a personal account. What a bank arrestment is explains that protected minimum balance.

A wage arrestment stops outright

Section 72(2) of the Debtors (Scotland) Act 1987 ends an existing earnings arrestment on the date of sequestration, and section 72(4) blocks a fresh one for a debt claimable in the sequestration.

A statutory moratorium does not do the same thing, which catches people out. What sequestration does to diligence sets the two apart.

A sensible order to work through

• Get free money advice, which is a statutory requirement before a debtor application in any event.
• Know where your next wage or benefit payment is due to land.
• Keep money for essential living costs available around the date of the award.
• Tell your trustee which account you are using once the award is made.
• Ask your trustee, not a website, what will happen to the account you have.

The same points apply to a Minimal Asset Process, which is a sequestration too. Whether a bank account is frozen in a MAP covers that route, and how to apply sets out the steps.