Katona's bank account, credit frozen

Kerry Katona's bank account has reportedly been frozen and she has been refused any further credit.

The former Atomic Kitten singer has been forced to have her earnings paid directly into husband Mark Croft's account after being declared bankrupt in August.

Katona was ordered to repay £82,000 to the taxman but has reportedly continued to lead a lavish lifestyle. She was recently photographed on shopping sprees and holidays with husband Croft, spent £3,200 at an auction to dine with David Gest, purchased a new Nissan GR-R for £55,000 and has hired a personal trainer to relaunch her career.

"Kerry and Mark are burying their heads in the sand. All that Kerry wants to hear is that everything is going to be OK, and that is what her business advisors keep telling her," a source told Heat.

"But she is still splashing out on clothes and cars and a trainer, and doing it quite blatantly. She is going to be in real trouble because the taxman won't take kindly to her wealth."

The reality TV star could now lose her home if she fails to pay the final £82,000 of a £417,000 tax bill.

"We are all worried that unless she takes control and makes sure it is settled, she could lose everything," said the source. "If it is not settled a year after the bankruptcy, they could come and repossess her assets up to the value of the debt, which means she could stand to lose her home."