Can You Get A Bank Account If You Owe Your Bank Money?


What happens when you have defaulted with your bank and need a new bank account? One of our readers, Jack, had this question:

Hi Mr. Credit Card!

I had a quick question. So say I did owe a bank money and put them in my Bankruptcy, how will this affect me now and later? Will I be able to open a new bank account? Will this prevent me from getting loans later in life? Does it ever come off my credit report like a normal credit card?

Thank You!

Thanks for your question Jack.

When you default with your bank, it works a little differently than defaulting with a credit card company.This is because credit card companies report your payment activity to one (or all) of the three credit bureaus. Banks on the other hand report checking account defaults to a completely different system: The CHEX system.

The following is from Consumer Debit Resource:

The Chex Systems, Inc network is comprised of member Financial Institutions that regularly contribute information on mishandled checking and savings accounts to a central location.

ChexSystemsSM shares this information among member institutions to help them assess the risk of opening new accounts. ChexSystemsSM only shares information with the member institutions and does not decide on new account openings.

So, even though you included the debt you owed your bank as part of your bankruptcy, you are still going to show up as having defaulted within the CHEX system.

This means that opening a new bank account may be difficult, or impossible for you. When you decide it’s time for a new bank account, these are the steps you will want to take:

  • Go ahead and try opening up a new bank account online. More and more banks are offering online account applications. This means that if you are denied you won’t actually have to deal with a person, so it eliminates the embarrassment factor.

    A couple of caveats: Do not attempt to go through ING Direct for a new bank account unless you have excellent credit (and definitely not with a bankruptcy). They pull not only your CHEX data, but your credit report as well. It counts as a hard pull – which means that it will lower your credit score.

    Also, try to find a bank that advertises “second chance checking” or something of that nature. Be aware that you may have to keep a minimum balance in your account, or pay a monthly fee. It’s pretty much like rebuilding your credit. Sometimes you have to pay for the privilege.

  • Get a copy of your CHEX report - If you are denied a bank account anywhere, that gives you the right to a free copy of your CHEX report. You can click here to begin the process of ordering your CHEX report.
  • Pay Your Bank Back - CHEX reporting works a lot like your credit report. It takes a minimum of 5-7 years for a bad record to be removed. If you have trouble getting a new checking account, then consider calling your bank up and offering to do a settlement for part of the debt that you owed. Make sure that your removal from the CHEX system is part of the bargain.
  • Consider A Credit Union - Some credit unions do not use the CHEX system at all, so if you are really having a problem, take a look around your area and see if you can find a credit union that might be willing to open up an account for you.
  • It is definitely possible to still get a checking account while you have CHEX data listed from a default. It’s just going to take a little more work on your part to find a bank or a credit union that is willing to work with you.

    One final warning: Please be especially wary of online scams. There are many, many results for “Non- CHEX system banks” on Google, and most of them are fraudulent – they want you to buy a service, or sign up for something. Just skip those sites.

    Visit legitimate banks online, or go into your local credit bureau to fill out an application. Too many companies are eager to take advantage of people who have run into past financial troubles. Make sure that any business you deal with really is legitimate. If they are asking you to pay for a service, (or they charge a fee to open the checking account) then run the other direction fast.

    Stick to visiting the websites of legitimate brick-and-mortar banks that you can drive by in your own hometown. Fill out online applications only for those banks.

    The truth is, there are so many online scams for this second chance checking accounts – you really don’t want to end up a victim of identity theft just because you were trying to open up a bank account!

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