Checking Account and Bank Freeze

[CMP11681]

I will be filing a Chapter 7 within the next couple of days and I have a question in regard to my checking account. I currently have a loan through my bank with a remaining balance of $200. I was wondering if anyone has ever had their bank freeze their account once they received notice of their bankruptcy. I really do not want to change to a new bank but I also don't want to take the chance of them freezing my account. I am pretty broke right now but I do have just enough to pay off the $200 debt before I file. I would rather struggle right now than have them take my entire paycheck when it hits my bank next week. Any advice would be truly appreciated. Thanks!

[justbroke]

Welcome to BKForum.

It's an interesting question. There had been issues with Wells Fargo in the past where they would freeze an account. The members around here seem to agree that we should never have demand deposit accounts (DDAs) where we have credit products. There are some banking institutions, such as credit unions, that cross-collateralize certain loan products, and even have policies known as a right-of-offset for DDAs.

There is no way to specifically tell if your bank would do that. That's why we say to move the direct deposits if they go into a bank with offset rights or where you have credit products. It reads as though you may be up against a deadline and direct deposits generally take 2 cycles to get working. Technically, a preference occurs when you pay one creditor over another. I don't know what to do in your specific case.

Maybe you could ask your employer if you could get a paper check next cycle? I just don't have any much more advice on this topic.

[BKTexBCS]

I have a check/sav with WF and USAA. Here is what I did, no guarantee the same outcome will happen for you. I paid off my Dillard's account which is backed by WF. They promptly closed my account (the Dillard's account). It would have happened wither way.

I shifted my direct deposit from WF to USAA. Experienced no freezing of accounts. Balance with Dillard's was small. WF never forgets a bankruptcy so be prepared for that.