Wells Fargo froze my account

[WhatMoney]

Oh dear...now I'm worried too!! I have this exact situation. My sister and I are both on my _mother's WF checking/savings account. I pay mom's bills.
The account is funded SOLELY by Mom's Social Security (under $1300 a month) and her small pension (under $200).

Now I'm rethinking after reading this post!! The other problem is --I don't have a WF account "on my own", but I DO have a Wells Fargo Financial loan, which I still owe about $475 on and would include in the discharge. My mother's bank account is never over $1500.
What to do??

Wells Fargo likely has the right to offset in your mother's accounts as well as your WF loan. This gives the bank the right to take money from any accounts with your name on them from WF to pay off your loan if you stop paying on it. That includes your mother's Social Security and pension funds. These right to offset agreements often specifically state that SSA funds are NOT exempt from their right of offset. Your mother could end up paying off your loan you wanted to include in your BK.

The only safe solution is to move your mother's Social Security account to another bank. But if you still want to be a joint owner on her account, that account is still subject to a levy if you get sued before your BK. You would need to explain and prove to the court that the funds in your mother's account are exempt to get her funds released. You would also need to find a bank that does not freeze funds until they are released by the trustee as WF does.

To avoid the danger of your debt affecting your mother's income, you must find a way to avoid joint ownership. There are a few options:

1.) Become a Representative Payee for your mother's SSA ONLY account. Since you are not a joint owner, only her trustee on this account, a judgment against you should not be able to touch these funds. And before you open a rep. payee account you need to discuss this with the bank manager or legal dept. to confirm they understand this and agree they will not honor a levy against a Representative Payee account. Note you should not deposit pension funds in a Rep. Payee account. You can find out about Rep. Payees at the Social Security site.

2) Become a Power of Attorney (preferably Durable POA) for your mother. You should then have signature rights to manage you mother's account and pay the bills, while you're name does not appear on the account as the owner. Again, the bank has to agree to this - bank's are becoming more reluctant to honor POA's these days. This type of account is usually called a Power of Attorney account by the banks.

3) Open an online checking account at an out of state bank for your mother and use direct deposit of SSA. You can manage that account with a POA as well - I won't say anymore about the possibilities here.

4) Open a joint checking account with your mother in an out-of-state bank and hope no one finds it. After BK, you could return to a local bank.

Finally you need to confirm whether the pension income for your mother is also exempt. It would be safest to keep the SSA deposit account separated from the pension funds in case a creditor argued the SSA and pension funds were mixed and therefore you mother's SSA was not exempt. Note I said argue - it's what they can convince the judge that counts, not the laws.

[nickifan]

Thanks for the reply, whatmoney. Geez...what a mess. I'm more upset about possibly messing with her bank stuff than my own situation. Oh, for foresight....

A quick thought: What if I just go ahead and pay off the damn WF loan before filing?? Or at this point is that "preferential"? As I say, I have no other connections to WF besides that small loan, and my name on her bank account.

Second thought: Rather than moving her account (dealing with SS and pension direct deposit changes will be a nightmare)...what about just getting my name OFF it? Not that I can think of a good reason to tell WF why I want off other than "I don't want you to S---- with me when I discharge your loan...."

I have a headache just thinking about these ramifications.

[DeadManCrawling]

Removing your name from her account will cause YOU problems.

Paying off the loan, if you can do so, may cause the bank problems. Which is kind of nice.

If it is ruled a preferential payment, the trustee will simpy take the money back from the bank and spread it around. Which doesn't hurt you a bit, other than the fact that you paid it off.

It is unclear, though, WHY some banks freeze accounts. For some it seems to be a dollar figure on the balances. For others, a cross-collateralization. For others, unkknown factors.

Good luck, and best wishes.

[WhatMoney]

Second thought: Rather than moving her account (dealing with SS and pension direct deposit changes will be a nightmare)...what about just getting my name OFF it? Not that I can think of a good reason to tell WF why I want off other than "I don't want you to S---- with me when I discharge your loan...."

Good luck with that. Most banks will insist you close the joint account and have your mother open a new account only in her name, if you want your name off the joint account. If WF allows you to remove your name, they will insist your mother and you be present before they change the joint account. I doubt they will do this - banks are no longer friendly to their customers.

So you will still need to change the direct deposit information if your mother gets a new account with WF. It's not clear how you intend to have access to her account and pay her bills and sign her checks, unless you intend to pose as your mother. As a reward to WF, you should find another bank for your mother's direct deposits if they refuse to remove you as a joint holder.

Once you have a new account, your mother can change her direct deposit by calling Social Security, or by filling out a direct deposit form that you get at your local social security office. It takes from 20-60 days for the change to go into effect.

[nickifan]

Good luck with that. Most banks will insist you close the joint account and have your mother open a new account only in her name, if you want your name off the joint account. If WF allows you to remove your name, they will insist your mother and you be present before they change the joint account. I doubt they will do this - banks are no longer friendly to their customers.

So you will still need to change the direct deposit information if your mother gets a new account with WF. It's not clear how you intend to have access to her account and pay her bills and sign her checks, unless you intend to pose as your mother. As a reward to WF, you should find another bank for your mother's direct deposits if they refuse to remove you as a joint holder.

Once you have a new account, your mother can change her direct deposit by calling Social Security, or by filling out a direct deposit form that you get at your local social security office. It takes from 20-60 days for the change to go into effect.

Geez again...my mother is in her 90s and in a nursing home...there is no way I'm getting her over to the bank or a new bank just to do this kind of crapola. She's legally blind -- her signature isn't even something that resembles writing. It's one reason I or my sister have paid the bills for several years. I do have POA but the paperwork is from another state and a few times places have balked that the addresses no longer are valid, etc.

I'm thinking pay the WF loan off right away and hope for the best... trying to get my name off sounds like it will open a can of worms. The part about it possibly taking 60 days means this could all be moot if I file in January...

Still no reply from yesterday's email to atty about my residency issues and hopeful avoidance of NY prop exemptions. As this very critical point of how/when to file stemmed from the initial consult, and I have not formally hired her...is it reasonable of me to expect an answer? I'd like to ask about this whole WF thing again, but I'm not sure at what point an atty will think I'm just trying to get more free info. (As if I were even considering pro se...no way.)

OR...I can interview a third atty and ask them....

[Snickers]

nickifan - Personally, I would never trust that your name was truly removed unless there was a new account.

- Go to the bank with your sister (you said she was also on the account) and the DPOA.
- Tell them that you would like to open a new account with just your Mother & Sister's name.
- If it comes up, just tell them that you are having 'family issues' and thought it would be safer to have the account joint with just your sister.
(Let 'em think what they want...crazy Uncle objecting to you having access...doesn't matter.)
- Ask them to keep the old account open for a little while until the Direct Deposits are straightened out.

Since they get to keep the account, they really shouldn't have any objections. Maybe your sister can sign the checks for a time. When the dust settles from your situation, just head over to the bank and put your name back on the account.

[jshep]

I finally received a notice from Wells Fargo in the mail today that my accounts were frozen. The notice is dated November 6, and it didn't show up here until November 12th.

Of course, it's all unfrozen now, but, this is the first time anybody has notified me that the account funds were made unavailable.

If I'm reading this letter correctly, Wells would hold the funds until 30 days after the first meeting of creditors if they were not directed by the Trustee to do otherwise.

Hopefully, if they send a copy of this letter to my Mother-In-Law, who is recovering from a stroke and broken hip, she won't forget that this is already taken care of and have another stroke. I know I felt like having a stroke last week when I suddenly couldn't use my account without notice.

[WhatMoney]

Geez again...my mother is in her 90s and in a nursing home...there is no way I'm getting her over to the bank or a new bank just to do this kind of crapola. She's legally blind -- her signature isn't even something that resembles writing. It's one reason I or my sister have paid the bills for several years. I do have POA but the paperwork is from another state and a few times places have balked that the addresses no longer are valid, etc.

I'm thinking pay the WF loan off right away and hope for the best... trying to get my name off sounds like it will open a can of worms. The part about it possibly taking 60 days means this could all be moot if I file in January...

Paying off your WF loan will protect your mother's account before the BK. But if you keep a joint account with your mother you must report that in your BK filing, and WF will probably freeze your mother's account when you file. Money in a joint account is equally owned by either party. Of course you will be able to get the trustee to call WF and release for your mother's SSA income, just as jshep had to do.

I was able to open a joint account with my mother for her SSA DD without her presence back in 1998, using only my DPOA. Every bank I have asked will no longer do this; 911 and terrorist security laws are the excuses they use now. They require her presence (impossible - in her mid 90's and totally disabled in a nursing home) to open a joint account, or my only option is to open a DPOA account or Representative Payee account for her, where I am only the trustee. When my mother dies, the DPOA and Rep. Payee expires, and any funds remaining after death are frozen by the bank as estate funds, to be distributed only by the estate - often a long process.

[figureitout]

I've got 15K frozen in Wells Fargo -- just found out today. Filed BK this past Monday. Tomorrow is Thanksgiving so I'm screwed until at least Monday. So what if I just dismiss the BK -- wouldn't Wells Fargo have to release the money? I'm so confused about what to do.

[whipster1]

Sorry to hear your situation OP. Wells is the WORST about freezing accounts for no reason. My attorney says that there will be some lawsuits against them soon for this but not in time to help you.

[DeadManCrawling]

Dismissing takes a motion and a ruling from the judge, I believe.

Read back on the thread here and you will see the steps others took to unfreeze their funds. It is too bad this happened over the holiday, but obtaining a dismissal will likely take longer than unfreezing the funds.

Call your attorney, they will know how to get this done the quickest.

Good luck.

[jshep]

I've got 15K frozen in Wells Fargo -- just found out today. Filed BK this past Monday. Tomorrow is Thanksgiving so I'm screwed until at least Monday. So what if I just dismiss the BK -- wouldn't Wells Fargo have to release the money? I'm so confused about what to do.

As upsetting as it was, it was fairly quick and easy to fix. One problem is that Wells seems to have a habit of doing this to people just before closing for a weeknd or holiday. I could have had my money back the next day, had they not done this to me on a Friday night.

I would not suggest dismissing the BK.

What I would do is contact your Attorney ASAP. Ask the Attorney to contact the Trustee and have the Trustee contact Wells Fargo and direct them to release the funds.

My account was frozen on a Friday, then, Monday morning my Attorney did this, and the money was available to me that same afternoon. There have been no problems since.

Good luck. This was terribly upsetting to us. I wish I had read up on it before filing because I could have avoided it completely if I had just known. I would definately be interested in helping in any lawsuits against Wells Fargo over this practice. I have detailed records of what happened in our case.

-Joseph

[BobMango]

I've got 15K frozen in Wells Fargo -- just found out today. Filed BK this past Monday. Tomorrow is Thanksgiving so I'm screwed until at least Monday. So what if I just dismiss the BK -- wouldn't Wells Fargo have to release the money? I'm so confused about what to do.

Unfortunately you can't just dismiss the bankruptcy. Once you file it's in the trustee's hands.

Did you have that money exempted? If not it's likely the trustee would take it if WF did not. If you are not cross-collateralized with WF and were able to exempt it then you should get your money back.

[jshep]

REsponse from Comptroller of the Currency

When I was in a rage over Wells Fargo freezing my bank account after I filed Chapter 7, I went online to see where I could file complaints about their practice.

One of the complaints was with the Comptroller of the Currency, Administrator of National Banks.

I received a letter back from them today saying:

"Our records indicate that we had previously established a case on this issue under Case 992237. In order to streamline our process and avoid any duplication, we are closing this case and you will be notified about the resolution of your complaint under Case 992237."

It appears that this office of the federal government is already investigating this practice by Wells Fargo, so my complaint joins the other case in progress.

For others who have had this done to them by Wells Fargo, you might want to file a complaint. You can do it online at this website. That way you would be part of the ongoing investigation:

http://www.occ.treas.gov/customer.htm

My complaint centered around not being informed by Wells Fargo, and my belief that they had no legal reason to freeze the account. I would have understood it had the Trustee ordered them to freeze the account, but Wells Fargo freezes them automatically when they discover bankruptcy has been filed. Then one has to get the Trustee to tell them to let the money go, which is a time consuming and potentially expensive process because it involves getting you own Attorney to do more than they were originally paid to do.

[nickifan]

Our attorney warned us that we should move our money from WF before we file. They will freeze your account even if you have no debts/loans with them.

I had another free consult with a BK attorney last week. My issue with WF is that my name is on my MOTHER's account, and her checking account is funded solely with her SS check and a small pension, both on direct deposit. (Meaning it would be a royal pain to switch her to another bank.) My mom is in a nursing home and also legally blind, so I (and my sister, also on the bank account) pay the bills.

I have no WF bank account myself, but I do have a Wells Fargo Financial personal loan, with $450 outstanding. I want to discharge that if I do Ch 7, but I am concerned about WF freezing my mom's account simply because my name is on it.

I brought this up to the attorney, who originally said "get your name off" mom's account...then later decided that just emptying the account on/right before filing day would suffice, then I could put the money back in a few days later. She said another client had the same situation and that worked out. She did acknowledge that the BK trustee could order the funds unfrozen (if WF did that), but it would take time, and not necessarily be resolved in a week. She also said not to pay off the WF loan, which is what I was thinking of doing to hopefully avoid any WF intrusion on my mom's account, but just make the regular payment until I decide to file.

What think of this approach?