I did not file BK & Wells Fargo Froze ALL of my FUNDS! PLEASE HELP!

[despritfreya]

So you saying the automatic Stay upon BK filing prevents a bank from any administrative freeze on the debtor accounts?

Yes. A bank's sole ability to "freeze" the account as allowed by the Code is its right of offset. Anything other than that is exercising control over estate property. If there is a question as to whether the debtor, the trustee or some 3rd party (OP) gets the money the bank has the duty to interplead the funds thus turning them over to the Court, not wait for some over burdened Trustee to make a decision, or worse yet, take the law into its own hands.

This is the bottom line from Mwangi:

"When Wells Fargo took no action after receiving no instructions from the trustee as to how to disburse the account funds, which were indisputably estate property, Wells Fargo “exercised control” over those funds, and it violated the automatic stay. On remand, the bankruptcy court should determinewhether Wells Fargo’s continuation of the administrative freeze and retention of the account funds claimed exempt, in the absence of instructions from the trustee, was reasonable in light of the Appellants’ demand that the subject account funds be released for their use. If the bankruptcy court determines that Wells Fargo’s conduct entailed a willful violation of the stay under § 362(a), then the bankruptcy court will need to determine what, if any, damages the Appellants are entitled to under § 362(k)(1). We leave those determinations to the bankruptcy court.

VI. CONCLUSION

The bankruptcy court erred when it determined that Wells Fargo did not exercise control over property of the estate when it placed its administrative freeze on Appellants’ account funds. Appellants have standing to seek sanctions against Wells Fargo pursuant to § 362(k) for willful violation of the stay with respect to their interest in estate property."

__________________________

OP's situation is worse for the bank. If OP's demand for the release of the funds is not honored, then not only did the bank, without justification, exercise dominion and control over the funds, it did so when the debtor had no equitable interest. Not only did the bank violate the automatic stay as indicated in Mwangi (legal title is property of the estate but is subject to the equitable interest), it violated OP's due process rights by considering itself "quasi governmental" and acting as the "judge, jury and executioner".

Des.

[robertr1784]

Sorry about the multiple postings, I was scared and desperate. As of yesterday, this is where I stand - I still have 0 money, I had to borrow money for an attorney, and I am still in limbo.

The attorney I am working with has dealt with this before, but the BK is a mess. My friend did not exempt the account or mention it in her petition. I went directly to the trustee's office, and the trustee was not there- but his main assistants were. I explained everything to them, and they gave me specific instructions as to what to do. Because both my friend and I broke down in front of them, it seems - they were sympathetic to my situation. The main assistant took the time to look through all of the paperwork, and saw LOTS of errors. Since my friend filed on her own with no attorney, she understood why the BK had so many mistakes.

1) We have to amend the exemptions, showing the account (my lawyer told me the same thing). This will be done Monday morning.
2) She needs the generic letter from Wells Fargo, which asks the trustee what WF should do with the funds.
3) Since the trustee does not write/generate letters, we have to type one up saying that WF should unfreeze the funds and trustee MAY or MAY NOT sign it.

If he signs, they will send WF and release our funds. I feel semi-hopeful because after we left she took the time to look for #2(letter from WF), she took the time to even more thoroughly look through my friends case, and I am hoping she is sympathetic to our situation. She even told us she would leave our paperwork on her desk, and make sure the Trustee looks at it - as soon as we give her the amended papers.

People BEWARE! There are TONS of shady lawyers out there, through my google searches, phone book calls, i had lots of lawyers advising ME to do crazy things. One guy told me to file BK immediately - yet I have little debt (only student loans), and a healthy yearly income.

But i did come across a few people that offered their advice at 0 cost, and took 30 minutes of their day to brainstorm with me. The reason I am going with the current lawyer is because her response matched that of the trustee's assistance. Since my friend only exempted 2k, and my account has enough funds together with her exemption to fall underthe 20k - i am being told it should be ok, but there is no guarantee as it is solely up to the trustee. BEST CASE -funds released next Tuesday, which is the earliest the trustee can see her paperwork. MID CASE scenario I wait until the creditors meeting, and have to prove all the money is mine, which is still a pain and can possibly ruin my credit as I will fall behind on MOST OF MY BILLS. WORST CASE - the trustee takes some or most of my money, but it seems unlikely.

This has been the biggest tes i have ever encountered. I will never wish this on anyone. To wake up on Thanksgiving with 0 funds, checks have already begun to bounce, and I am negative hundreds of dollars. I have had to borrow money from family, which needless to say is embarrassing as I have always been viewed as successful and responsible. But what other options are there, either I die slowly or keep fighting. So sad...

[Exployer1234]

Sorry to hear you woke up to money. When you do get all this mess taken care of cancel your account and open up a new checking account where NO ONE is on the account but you. I know you want someone to have access to your account incase of an emergency, but in today's times it is not a good thing to do. There are plenty of husbands and wives that have separate checking accounts for this very reason. Also even aging parents refuse to add a beneficiary to their accounts. If someone else has to file BK and messes up then all their money will be taken out of their account.

[tcreegan]

Hi Robert,

Does your friend have the NOLO book on filing BK? www.nolo.com If not, have her get one ASAP, it is a step-by-step guide for filing.
(unless the atty you hired is going to do it for her)

..my friend and I broke down in front of them...they were sympathetic to my situation ...worked at the trustees office, right? Try it on WF, what do you have to lose?

People BEWARE! There are TONS of shady lawyers out there, through my google searches, phone book calls, i had lots of lawyers advising ME to do crazy things.
But i did come across a few people that offered their advice...took 30 minutes of their day to brainstorm...reason I am going with the current lawyer is because her response matched that of the trustee's assistance

Now that you mention that, I will put in my public service announcement: shop around for attorneys. Discuss communication, email/phone/fax/in person, talk to atty/secretary/paralegal, turnaround time on responce; Discuss organization/work ethic, file doc. ASAP or before deadline is OK, cross all i's and dot all t's vs 'good enough', Discuss competetence, filed many cases that look like mine, know local trustees/court, Discuss retainer; exactly what is included, what is not.

With all the stress you are going through Robert, I hope you got a chance to snatch some turkey and catch your breath...

Tom in Colo

....'public service announcemnt' ?? Gad, how old am I?

[robertr1784]

Hi Tom. She just got the NOLO book, and both her and I are going through it. I also appreciate the advise regarding Wells Fargo. We walked into a branch, and asked them to help. They all refer you to BK department for WF, no one in any of the branches has the authority to do anything. Also, my attorney will be filing the amendments and exemptions.

If she files my savings/checking accounts as exempt, does that mean it is protected, because they fall under the california wildcard exemption and less than the amount total 22,075? Can the trustee still disagree and decide to go after it? Just hopeful someone knows, will be reading exemption forum soon.

[tcreegan]

Hi Robert,

They all refer you to BK department for WF, no one in any of the branches has the authority to do anything ...isn't this frustrating?!!! drives me nuts....

If she exempts it, the trustee can't get their hands on it. That 22K CA wildcard sure is nice...

Tom in Colo

[robertr1784]

Tom if you are right, and that is what happens - then that is the best news I've heard all weekend. I will keep you and everyone uupdated.

[robertr1784]

Ok people! I have come across another possible solution. What about converting the chapter7 to a 13? Will they allow my friend to keep her assets, IE my bank account? And will the trustee allow the conversion?
If yes, what will I need to do to help show I am willing to help her make payments on her re-payment plan?

[despritfreya]

I have come across another possible solution. What about converting the chapter7 to a 13?

One no longer has the absolute right to convert a 7 to a 13. But, I think you are over analyzing you issues. You have been batting around the idea of the exemption. If the money fits under the California exemptions I believe your problems are resolved. Reading the posts however, (and I apologize for convoluting this issue) I see one downfall with the exemption tactic.

1. You assert the funds belong to you.
2. Declaring an exemption asserts that the funds belong to the debtor. This means they are an asset of the bk estate but are subject to the allowed exemption.
3. If the exemption fails (and I sure hope the posters who have discussed the exemption strategy are correct), how do you back track? If the funds belong to you then they do not belong to the bk estate. You can't have it both ways.

Just food for thought.

As it relates to a Chapter 13, assuming no one argues that attempting to convert is in bad faith, yes a Chapter 13 allows a debtor to keep non exempt property so long as they agree to pay the value of that property to the unsecured creditors over a 3 to 5 year period.

Des.

[robertr1784]

Hi Des. Thats why I have been toying with the idea of chapter 13. My life, reputation, future, and business are on the line. I understand your logic, as I have already gone down that road. I have asked my attorney as to why we are claiming them as an exemption for her, when the money is mine.

The way I see it, is give the exemption a shot, if the trustee signs off then we move on. If he does not, I file the conversion. I am not a lawyer and do not get this stuff, I have been reading this entire forum, NOLO books, and this forum for some way to fight this. The trustee's assistant has informed me that the exemption is the route to take, but with a 13 (if no one objects, because it is good faith) will protect the accounts. Thank you for brainstorming des, all rebuttals and pitfalls are appreciated - as I am the type of person that wants to be ready for EVERYTHING.

[robertr1784]

Des. I have not done anything, so if you have any other pitfalls please keep them coming. I will meet with my attorney at 9am, and proceed from there.

[robertr1784]

Also des, at this point the trustee already views the money as hers, because she is on the account. So isnt it relevant that we exempt it?

[despritfreya]

Also des, at this point the trustee already views the money as hers, because she is on the account. So isnt it relevant that we exempt it?

I disagree with the trustee. If the funds belong to you, and you can prove it, the Trustee has no interest in them under 11 USC 541(d). The debtor has "bare legal title" and the estate's interest in such title is subject to your legal, and more importantly, you equitable interest in the funds. This is no different from when my clients are on their parent's account for "estate planning purposes". The account is listed on Schedule B with a $0.00 value and a notation that the debtor has no equitable interest. The account is again listed on the Statement of Financial Affairs under "property held for another". I have never had a problem with this.

And, on second thought, maybe you can have it both ways:

"Ok Mr. Trustee, either the funds belong to me and are not property of the estate, or the funds belong to the debtor and are subject to the exemption. Either way Wells Fargo needs to release them and so do you."

Des.

[lrprn]

Hi Des. Thats why I have been toying with the idea of chapter 13. ... The way I see it, is give the exemption a shot, if the trustee signs off then we move on. If he does not, I file the conversion. I am not a lawyer and do not get this stuff...

You are right....you aren't a lawyer, Robert, so please stop jumping to make decisions when you don't understand yet what's going on.

Filing a 13 if it's not necessary will be jumping from the frying pan into what could be a completely unnecessary fire that could harm your business in the long run far more than this situation. Give the lawyer you hired a chance to sort this out.

Filing bk isn't like running a business. Often moving quickly just so you can be "ready for EVERYTHING" is the very worst thing you can do when bk is involved. Filing a 13 in this situation could complicate things beyond redemption. Be patient for a few days. Wait to see what your lawyer says is your best option in this terribly unfortunate situation.

[robertr1784]

Hi Lrprn. You are 100% right, and I appreciate the bluntness. I just want to do my best to protect my accounts, and I am not moving quickly - as I have officially done nothing, except speak to the trustee. And I do not plan to do anything until I recieve advise from my lawyer. I am simply familiarizing myself with all the options, rules, and variables - and plan to present all my findings and questions to my lawyer to see what is the best route to take. What better place to brainstorm than this forum?