What happened to your bank account after filing Chapter 7?

[magicalcat]

Hello everyone,

So again, I'm sorry if I'm asking really basic questions, but I'm very early on in the process of filing Chapter 7. Scared and confused are really the only words to describe how I feel. I read that many banks will automatically freeze your account once they receive notice that you've filed for bankruptcy. Additionally, I've read many banks won't allow you to have a current account in the midst of your bankruptcy. What does this mean if you receive your income via direct deposit? Will your bank unfreeze your account if you ask them to? The generic info I've found on the internet makes it seems like bankruptcy makes you a leper to all of your creditors regardless of whether or not they're going to get "burned" in the process.

What was your experience with basic checking accounts that are active and in good standing? Should I start preparing by requesting my income via check instead of direct deposit? Is the trustee entitled to any money in your account (assuming you are broke and whatever amount you have is going towards bills)?

I know the obvious answer is "talk to your lawyer", but it's been remarkably difficult to speak to my attorney and whenever I've been able to they act like answering my questions is a huge bother.

Thank you

[xyta777]

Well, I can’t speak legally but my own experience was this:

- my main chase account, nothing happened to. No mention of it from them at all (I also had no chase credit obligations, just banking with them).

- my secondary savings at a credit union was frozen, esp because credit unions have a cross utilization clause, I’m sure you saw it in your research as well. So because I had credit obligations there, that account was frozen.

- I had an account at a second, online bank as a back up, in case anything happened to chase.

- I’m self employed so the direct deposit was a non issue for me. If I did get direct deposit earnings, it might be prudent to switch them to a paper check so you can control where that money goes. Obviously that’s a personal choice for you to make and I’m not recommending any specific course of action.

anyway, like I said, I’m not sure about the process legally and from state to state etc, but that was my experience. I filed 8/22 and was discharged exactly 63 days later.

[justbroke]

Unless you're at Wells Fargo or a credit union (CU), nothing will happen. Here's some good advice: never have your demand deposit accounts (DDAs) -- such as checking/savings -- where you have credit products.

The problem, as mentioned, is where you have credit products or, especially in the case of a CU, cross-collateralization. Stay away from Wells Fargo.

[Backagain]

I had checking with my credit union. I did not have a credit card with them…nor did I have anything I owed to them
while I still had the checking account, the credit union decided to take away from me all online access. I also couldn’t send a domestic wire transfer because they put a note on the account that it would require “special” permission to access that service. So, yeah, they treated me like the biggest dead beat around. But, they didn’t shut off or close my checking

[Ekop785]

Nothing happened to mine, but I did not have any BK accounts that were affiliated with my bank.

[MotherJugs]

This is a great question and actually updated me on Wells Fargo where I bank. If you have an account there, drop it. Or leave a bare minimum to keep the account open but move your business to a new institution. I read previously that WF would freeze funds if you have a $5,000 balance or more; however, I just learned that they freeze it no matter your balance and that it's hell to get them to unfreeze. Scary stuff, and apparently they're the worst of the bunch. Several law firms strongly advise their clients to dump WF, so if you bank there, get rid of it.

In a nutshell, here is what many law firms are stating: It is a bit perplexing, but Wells Fargo claims that it has an obligation to preserve the assets of the bankruptcy estate even if the funds are exempt. This is a unique way to look at the law. In reality, all this practice accomplishes is more work for everyone involved, including the trustees. Again, it can be a time-consuming process to obtain a letter from the trustee to unfreeze the account. If you plan to file for bankruptcy, close all accounts at Wells Fargo and move to another financial institution.

And don't be scared.... you'll make it through this, just pay heed to the above information and protect yourself.