suspicion of abuse

[novemberrain]

i filed for chapter 7 bk. i was told by attorney that there was a stay on all our accounts and we would stop being harrassed.
well....... tonight my dh went to use his atm/credit card and it was declined. i then checked with our bank and one of the creditors sweeped out our checking and savings account. i then went through all the bk paperwork and even checked online with the courts and it has stated that creditor can do nothing because of the bk. has this happened to anyone? if there is a stay isnt it supposed to stay??

[CATCHMEIFYOUCAN]

Cross Collateral !

I am sorry to hear that!

Did you have credit cards or any loans (secured/unsecured) tied with the same bank you had your checking and savings account with? The banks have what they call a cross collateralization, where if you file bankruptcy they can legally wipe out any money you have and automatically apply it to any balances you may owe on the other accounts. I typically see this with credit unions.

This happened to me, but I'm sure I didn't lose quite as much as you may have. I was going through a Debt Management Program at the time and they informed me of the steps I needed to take to prepare for the program, and one was to close my bank accounts I had credit cards and or loans with (due to the cross collateral rule), and to immediately set up accounts at another unrelated bank. Well I couldn't close them out completely, the bank wouldn't let me because I still owed on the cc's and loans, but what I could do was keep the minimal balance to maintain the acct(s). So I only kept $5 (which was the minimal), except for one account, I kept $10 in. I immediately changed my direct deposits to my new bank.

I decided not to go through the program and decided to file Bankruptcy. Come to find out, one of the creditors (A Credit Union) took $5 and left me $5 from one of the accts I had left a $10 balance in.

The only thing I am thankful with that Debt Management Program (even though it turned out to be a rip off in the end), was the information they provided as to what can and will happen while I was preparing for re-organizing my debt. When I wanted out of the Program, they were a little upset and tried to pursuade me not to file and that I would fail - so much for encouragement!

Well, I'm not sure you can do anything to get your money back?

But I do wish you the best !

Catchmeifyoucan !

[CityGirl]

but catchme, your situation was that you owed the credit union right? I dont think a creditor can do this legally after you file! I would love to hear other's opinions on this! I think he is referring to say an American Express taking money out of your checking account. This is scary if this happens.

[brokeinmichigan]

I didn't have banking account problems, but one of my creditors attached a garnishment to my wages after we filed. I let the paralegal at our atty's office know, and within 48 hours, the garnishment was halted, and a check for the amount they had garnished was issued! Call your atty/paralegal right away!

[HHM]

Just because something is"not supposed" to happen, doesn't mean it won't. You need to identify which creditor did this (usually the bank will provide you a copy of the court order, assuming the action was the result of a judgment) and contact your attorney ASAP.

Did you have any payday loans that the payback was tied to your checking, is your bank actually a "credit union". etc.

In any event, assuming you filed BK BEFORE the funds were taken, you can undue the transaction and have the money put back, but it is going to take some time and hassle.

[guzzie]

sorry to hear that...good luck

[JRScott]

How long passed between the time you filed bankruptcy and the bank garnishment took place?

It sometimes takes up to a week for the court to mail out the notices.

I hope you didn't have any debt with the bank in question, if so they probably activated a clause and seized your assets.

If its not them then yes they are in violation of the stay. Go to the bank ask for a copy of the information regarding the seizing of the funds. Take said copy to your lawyer. It'll take some time but it can be reversed.

Violating automatic stays willfully is frowned heavily upon by bk judges.

[novemberrain]

thanks for all the input.
i filed for bk on 5-18-07. we had our 341 meeting 7-12-07. the creditor that took our money filed a lien in court on 7-18-07.

my bk was investigated due to the presumption of abuse. the bk court wants to dismiss the case but my attorney hasnt signed the dismissal yet that is why i do not understand why or how the creditor (eskanos & adler) took our money. i thought since the bankruptcy is still in effect they cant touch us.

[HHM]

So your chapter 7 is going to be "dismissed"?

In any event, if the BK had not been dismissed (your attorney usually does not sign the dismissal unless it is a voluntary dismissal), then, yes, they have violated the automatic stay, but to do anything about it, you need to file a Complaint in BK court alleging the violation of the automatic stay, in essence, you need to start a mini-lawsuit in BK court to get your money back.

[CATCHMEIFYOUCAN]

After the fact ...

but catchme, your situation was that you owed the credit union right? I dont think a creditor can do this legally after you file! I would love to hear other's opinions on this! I think he is referring to say an American Express taking money out of your checking account. This is scary if this happens.

Riiiiight, something more than meets the eye here, guess we'll have to find out from 'novem...'

I hope they get their money back, PLUS some if indeed this creditor has violated the stay!

Good Luck ! Catchmeifyoucan

[Gordon]

I'm hearing that sometimes the credit card companies can go to your bank and take money from your account. How long does it take before it reaches this step? I'm currently about a month behind on several accounts and am comtemplating filing.

[HHM]

I'm hearing that sometimes the credit card companies can go to your bank and take money from your account. How long does it take before it reaches this step? I'm currently about a month behind on several accounts and am contemplating filing.

That is more myth than reality.

In order to levy your bank account to collect a past due debt, the creditor must sue you first and obtain a judgment.

The only time, and I mean the only time, that an unsecured creditor can levy a bank account without a judgment is if you bank at the same bank that underwrites the credit card...and even then, its generally not legal (banks generally cannot "cross collateralize" unsecured obligations). The other scenario is if you have a payday type loan in which you gave post dated check (but the payday loan company could only get the amount that is on the check).

[novemberrain]

when i talked to my attorney today he still had not signed the dismissal so the stay is still in place. the attorney was supposed to sign the dismissal last week so i can refile for a chpt 7 again. the attorney thought i could get a chpt 7 but then the presumption of abuse came up and now the bk court wants to dismiss the whole case. so i am going to have it dismissed and file again right after.

i did however talk to the firm that took my money and they said it was a clerical error and they would take care of it. i really dont believe them. i guess i have to wait and see what happens.

[CATCHMEIFYOUCAN]

i did however talk to the firm that took my money and they said it was a clerical error and they would take care of it.

Thats a relief ! Soon as you get the funds, shut them down !
Don't want to risk anymore "clerical errors."
Thats what I would do, and if they don't let you than leave the bare minimum and see if you can start an account elsewhere, also if you have direct deposits going to them, stop them as well!

Thats some good news for you ! Best Wishes, CMIYC

[JRScott]

If your case is dismissed, you can't refile for 6 months I think. Its going to be hard to hold them off that long. Does your attorney have an idea of how to get through the BK without dismissal? Is that why he's reluctant to sign on?