Question about bank accounts / cc from same bank

[Usury]

I'm considering filing Chapter 7. My income has been reduced quite a bit and it's been a struggle the last 6 months. I realized it's time to stop struggling - it's just not worth it to maintain a credit score that doesn't help much in 'these times'.

My concern is I have a Wells Fargo checking/savings Account, and a Wells Fargo credit card. If I stop making payments a couple months before I file do they have the option of pulling directly out of my accounts?

Also, I have an accoutn with a credit union with whom I have an auto loan and a personal loan. I want to 'discharge' the personal loan, but I need to keep my car for work, so I will continue to make payments on that.

Basically, would it be in my best interest to open a 3rd account, with another bank right now, and use that for my main checking account? That way I can discharge the Wells cc and Credit Union personal loan? Or am I making too big of a deal about sharing debt/accounts at the same institution?

Thanks for your help! I've been reading quite a bit here and it's great information.

[StartingOver08]

Open another account at a neutral bank.

What you are talking about is the right of setoff and yes both your CU and Wells Fargo can offset your balances due with funds in your accounts. They will not give you notice. I found an interesting article that explains in full the right of setoff by lenders/banks, see below:

banking: firms' right of 'set off'
It is not unusual for a customer to have a current account, a savings account and a credit card account – all with the same bank or building society. The same customer might also have a loan, an ISA and a mortgage with that firm. And some of those accounts might be held jointly with someone else, usually a spouse or business partner.

In this article we look at what the firm can (or should) do where a customer does not have enough money in a particular account to make payments due from that account, but does have sufficient funds in one of their other accounts with the firm.
For example, when an overdraft facility on a current account runs out and the customer fails to pay the amount owed, can the firm take money from the customer’s savings account to reduce or clear the debt? Or, if a customer fails to make credit card or mortgage payments, should the firm use available funds from that customer’s current or savings account to make the missing payments, thereby helping the customer to avoid extra interest or charges?

The basic position is that a firm has a right – but not a duty – to look at a customer’s overall position and to ‘combine’ the accounts held by that customer. This is sometimes called a right of ‘set off’ or a right to ‘combine’ accounts. A firm has this as a general right, whether or not it mentions the right in the account terms. So, in the examples above, the firm can transfer money from an account that is in credit in order to make payments due on another account. But it does not have to do this.
Certain conditions must be met before the firm can exercise its right of ‘set off’.

The account from which the firm transfers funds must be held by the customer who owes the firm money.
The account from which the firm transfers the money – and the account from which the money would otherwise have come – must both be held with the same firm.
The account from which the firm transfers funds – and the account from which the money would otherwise have come – must both be held in the same capacity by the customer concerned. So, for example, if Mrs C holds a savings account in her capacity as treasurer of a local society, the firm cannot take money from that account to pay Mrs C’s personal credit card bill that she normally pays from the current account she holds in a personal capacity.
The debt must be due and payable. For example, if a customer misses making a loan payment, then (at least until it calls in the loan) the firm can take only the missed payment – not the balance of the loan.

We would not usually expect a firm to warn customers before it exercises its right of ‘set off’. A warning might prompt customers to move their money to an account with a different firm. But we think that it is usually good practice for a firm to tell a customer as soon as possible after it has made a transfer.

We would not generally expect a firm to use ‘set off’ before giving the customer a reasonable opportunity to pay the debt. However, what is ‘reasonable’ might depend on the customer and the history of the account.

The general position can be modified by agreement between the firm and its customer. This might include:
an agreement that ‘set off’ be available to a firm’s mortgage arm, where it is a separate legal entity;
an agreement to regularly ‘sweep’ any money over a certain balance out of a current account and into a savings account;
an agreement that money held by a customer in one capacity can be used to pay debts owed by the same customer in a different capacity.

http://www.financial-ombudsman.org.uk/publications/ombudsman-news/40/40_setoff.htm

[Usury]

Ok, so it looks like I should open a 3rd checking account with an institution I'm not 'involved' with.

Will this look okay that I did that when I file? It won't raise any red flags or intent to defraud or anything like that?

[jeb]

Ok, so it looks like I should open a 3rd checking account with an institution I'm not 'involved' with.

Will this look okay that I did that when I file? It won't raise any red flags or intent to defraud or anything like that?

Almost the first thing out of my Attorneys mouth was, "Open a new checking/savings account and close the old one." AFTER you have changed over any direct deposits, of course. - jb

[StartingOver08]

Ok, so it looks like I should open a 3rd checking account with an institution I'm not 'involved' with.

Will this look okay that I did that when I file? It won't raise any red flags or intent to defraud or anything like that?

Yes, it will look fine.

[cairncrazy]

that was one of the first questions my lawyer asked me... I had checking with boa... then a cc with boa... told me to open a checking acct at another bank!

[phigment]

So if I bank with Citibank and have a Home Depot card I should close the Citi account and go somewhere not affiliated with any cards with balances involved in my bk?

[NoMoreRed]

Our attorney told us right away to open a new bank account at a bank that you don't currently have a CC or loan with. Also, if you have any direct deposits or automatic withdrawals get those to start going through the new account prior to filing or stopping your payments. If you have a balnce in your accounts at the old bank then withdraw it and deposit it at the new bank or use it to buy essentials like food etc. to bring the balnce down to as clsoe to zero as possible. The banks will take your money out of your accounts to pay others that you owe and they are getting quicker to do so with the way things are now.

[golfgod00]

looking for advice, i had some large deposits from online gambling winnings thats put me in a mess, could i close that bank acct and open another one, would that help me filing?

also if you do that, dont that want 6months of statements, what happens if you just opend up a new acct, do they have a way of finding your past bank accts???

[AngelinaCat]

You will have to give your attorney six months worth of bank statements or six months worth of pay stubs/advices. If you open up another account and can hold off filing for six months or more (the more the better) then you can let the gambling charges go by the wayside.

No, 'they' don't have a way to find out your past affiliations. Privacy laws currently in place prevent that. You have to disclose your business. Or you may have an Enemy, such as a disgruntled ex who will be GLAD to expose all your dirty laundry.

But really, for the most part, no one is really going to care. You do have your life to live, and how you got to this point is irrelevent. Now, having said that, once you go through the BK process and see where you went wrong and can make adjustments for the future, you are expected to do that. That is why you will not be able to BK again for 8 years, unless it is a 13.

Good luck to you!

[freshstart10]

can banks still do right of offset after u file bk? i know i shouldnt have the acct anymore with this bank but theres a reason i am. im just curious if money goes in can they snatch it even after bk

thanks

[jeb]

looking for advice, i had some large deposits from online gambling winnings thats put me in a mess, could i close that bank acct and open another one, would that help me filing?

also if you do that, dont that want 6months of statements, what happens if you just opend up a new acct, do they have a way of finding your past bank accts???

Boy, wish I had some large deposits - from ANYWHERE!!!

Yup - they want ALL your accounts - bank, savings, stock, etc.

And I don't know for sure but would think that if they wanted to, a US Trustee could, with your SS#, find out about anything they wanted to about any and all accounts you hold. - jb

[StartingOver08]

Boy, wish I had some large deposits - from ANYWHERE!!!

Yup - they want ALL your accounts - bank, savings, stock, etc.

And I don't know for sure but would think that if they wanted to, a US Trustee could, with your SS#, find out about anything they wanted to about any and all accounts you hold. - jb

I agree. I wouldn't mess around with 'forgetting' to list an account!