A very common concern we hear from clients is what to do with their bank accounts before filing bankruptcy. Many clients are concerned that the money in the account will be seized once they file for bankruptcy protection.
If you are going to file for bankruptcy and you owe money to the bank that you have your bank account with then you need to switch banks to a bank that you do NOT owe any money to and make sure you don’t any funds in that bank at filing. The reason is because most financial institutions will cross collateralize their accounts. This means if you default on one account (like a credit card) then they have the right to seize those funds from another account (e.g. your bank account).
You don’t need to close the bank account but you do need to take your money out and then after the case is over you can check with the bank to see if they will allow you to continue banking with them.
In Georgia, consumers need to be aware that even if they do not owe Wells Fargo Bank any money but bank with them, they many freeze their account when they file for bankruptcy. We advise all clients with Wells Fargo accounts to take their money out of these accounts to ensure that their funds are not frozen. This is the only bank here in Georgia that we have seen take such an aggressive action against their customers.
Lastly, remember that if you have direct deposit you will need to also change this before filing for bankruptcy to ensure that these funds are deposited into your new bank account.
Questions? Schedule a FREE consultation online today: http://saedilawgroup.com/the_bankruptcy_process/