How Filing Bankruptcy Can Impact Your Bank Account

Filing Bankruptcy Can Impact Your Bank AccountIn this article, you will learn…

  • If you should close your bank accounts before filing for bankruptcy,
  • When you will be able to open a new bank account, and
  • If the bank can freeze your bank account when you file for bankruptcy.

Should I Close My Bank Accounts Before Filing For Bankruptcy?

As a general rule, you would not need to close your bank accounts before filing for bankruptcy.

The only time we encourage someone to close a bank account prior to filing for bankruptcy is when they’ve got a creditor that is deducting money electronically out of their bank account. If you don’t have a way of stopping those withdrawals, either through the creditor or your bank, we would want to shut the account down to remove their access. Even though we may be able to get that money back after filing, we want to avoid the hassle.

Will I Be Able To Open A New Bank Account During Or After I File For Bankruptcy?

You will be able to open a new bank account during or after you file for bankruptcy.

The only thing that might prevent you from opening a new bank account would be if you left that financial institution with your account overdrawn or you’re listing a bank account that is overdrawn at the time of filing your bankruptcy. If that financial institution has reported you to ChexSystems, which is just a database that financial institutions use to check whether people have left banks overdrawn, they may not permit you to open a new account.

Will The Bankruptcy Trustee Appointed To My Case Be Looking At My Bank Account After I Have Filed?

Typically, the trustee doesn’t really want bank statements. In cases where we’ve had a debtor that has a significant business activity prior to filing, however, the trustee will want to look at the bank statements. The trustee will be looking at what transpired prior to filing for bankruptcy.

Is There Any Bank Account Exemption For Bankruptcy?

In Chapter 7 bankruptcy, the trustee does not take any funds that are in your bank account unless there is no ability to exempt the funds. We know before we ever file the case whether or not we’re going to have an issue there. We don’t want our clients to be losing money out of their account, so we are careful to protect those funds.

In Chapter 13 bankruptcy, the only consequence is that there would be non-exempt money in a bank account. The debtor is then obligated to pay toward their unsecured debt an amount of money that would equal those non-exempt funds.

Will The Bank Ever Freeze My Bank Account Once They Receive Notice That I’m Filing For Bankruptcy?

In 99% of cases, the bank will never freeze your bank account once they receive notice that you’re filing for bankruptcy. What can happen is that a bank might not allow electronic transfers to come out of that account after someone files for bankruptcy.

Until the customer does some things in the bankruptcy case, which we’re monitoring, there is some possibility that the bank or financial institution will not allow electronic transfers out of that account.

Should I Cancel Any Automatic Payments That Come Out Of My Account Like A Car Payment Before Filing For Bankruptcy?

Unless you aren’t going to pay that creditor after you file for bankruptcy, you should leave your automatic payments alone. The financial institution might take action to stop it temporarily, but we will square all the issues away at some point and then the draft will continue as long as the client desires it to continue.

For more information on Impact Of Bankruptcy On Your Bank Account, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (888) 402-5557 today.

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