A 2nd Bank Account

[chrissa1]

An old school friend rang me last night. We haven't seen each other for about 30 years. While we were chatting, I told her about having to become bankrupt last year and after commiserating with me, she blithely told me that a younger friend of hers, (aged 24), had become bankrupt and that because my friend had two current accounts with her bank, she allowed this girl to have her wages paid in there and has given her the Debit Card for that account to use. Presumably in my friend's name and not the girls.

I din't say anything at the time, mostly because I couldn't get a word in edgeways but, is this legal and how is her bank letting her do this?

Just curious.

[factor-fiction]

It's certainly unwise.

[DTCwordfan]

well it's daft and your friend is effectively underwriting her. Is it deception from the younger person's perspective....mmmmmm, not sure on that one.

Anyway, I thought that you were allowed a current account even under bankruptcy for wages and basic existence.

[themas]

You are allowed a bank account while bankrupt. There is nothing illegal about having your wages paid into an account in someone else's name.

However, your friend is pretty unwise to do what she says. Using a debit card could easily result in an overdraft on the account (even if one is not authorised); if the girl didn't (or couldn't) pay it off your friend is legally liable, as the account is in her name.

Far better to help the bankrupt get a basic account in her own name - Co-op Bank are the best for that, & often give an Electron card with the account.

[chrissa1]

What about money laundering though? I think my friend thinks she is helping her young friend to stay on the straight and narrow, as the account has no overdraft facility.

Can wages just be put into any account electronically, with no name and just a sort code and account number? I thought that was impossible.

[EvianBaby]

You can pay wages into any account you like as long as the tax and ni are recorded for the right person (and paid).

[chrissa1]

Ok, but what about the time before, when debit cards could not be used without the owner's signature? Surely that would be fraudulent, as the young girl wouid be using my friend's name.

[EvianBaby]

Strictly speaking, I guess it would. But who's going to know with the chip and pin system. I have to give the lads at work my company card all the time, they've never once been asked why it's got a woman's name on it.

[ummmm]

That would be fraud.

[ummmm]

I use my OH's card all the time.

[DTCwordfan]

Didn't know you were a bankruptee, ummmm........

[themas]

If the bankrupt was to use the account for anything other than wages & other ordinary day to day items, then it could be seen as attempting to put assets beyond the reach of the Official Receiver, which is a bankruptcy offence.

Money laundering comes under different legislation. Banks can enquire into the source of large deposits to accounts.

[chrissa1]

Yes, I did too ummmm. Thanks for all your thoughts guys.

[sherrardk]

I don't understand why the person in question didn't just get their own bank account (all banks are obliged (in theory) to offer a basic bank account to bankrupts - I got my first account after bankruptcy with the co-op and got an electron card with no overdraft facility (obviously), in some cases the only one you can get is with the post office.).

[chrissa1]

Me neither sherr. I have been with the Co-op bank since 2008 and they were just fine with me last year.

[ummmm]

I'm not, DT. I just prefer spending his money :-)

[ubasses]

There could be a further problem if there is any fraud on the account your friend will be in breach of the terms of the debit card, having allowed a third party to have the card and pin. That would make her liable for the full amount of any money stolen from the account

[chrissa1]

I agree ubasses but as the only money in the account belongs to the young friend, nothing can be stolen.

As I said in my OP, it's an odd situation.

[ummmm]

I don't think it's really odd. I used to pay wages into different accounts for various reasons.

[boxtops]

I pay different things into different accounts, that in itself isn't odd - but letting a stranger have your PIN on your card is against the rules.

[ummmm]

Yes, but I don't think it's odd. I bet it's much more common than people think.