Can my bank take my checking account after a discharge?

[hanna1981]

I got a discharge over a year ago. I had a loan with Wells Fargo. When i filed i was unemployed and didn't have much in my checking account. I am now working and I still do my checking with them and wanted to know if they can take my checking account money after the discharge.

[free2breathe]

If your loan with Wells Fargo was listed in your bankruptcy and discharged, they cannot collect on that debt legally.

[ccsjoe]

They can't "take" your account, but they can close your account and refuse you as a customer. Of course, upon closing your account, they will mail you a check for the funds contained therein.

[doni49]

They can't "take" your account, but they can close your account and refuse you as a customer. Of course, upon closing your account, they will mail you a check for the funds contained therein.

But don't forget about right-of-offset. However if they didn't close the account (and take the funds) before the discharge then they can't now offset the debt by taking funds deposited in the account post-bk.

[rdknipp]

If you have a savings/checking account with a bank, that you also have a credit card/loan with, you should pull your money out asap. The creditor has the right to set off any debts included in and discharged by the bankruptcy with the amount of monies that were in the account at the time of filing. The automatic stay imposed upon the filing of the bankruptcy does not end the right to setoff funds - it only forces the creditor to file paperwork with the bankruptcy court. This is more common with credit unions (who are also more likely to cross-collateralize) - I believe there are some restrictions on large federal banks such as Wells Fargo and their right to setoff depending on the type of credit (secured vs unsecured). Its probably best to remember for lots of different reasons that its not good to bank where you owe.

[msm859]

If you have a savings/checking account with a bank, that you also have a credit card/loan with, you should pull your money out asap. The creditor has the right to set off any debts included in and discharged by the bankruptcy with the amount of monies that were in the account at the time of filing. The automatic stay imposed upon the filing of the bankruptcy does not end the right to setoff funds - it only forces the creditor to file paperwork with the bankruptcy court. This is more common with credit unions (who are also more likely to cross-collateralize) - I believe there are some restrictions on large federal banks such as Wells Fargo and their right to setoff depending on the type of credit (secured vs unsecured). Its probably best to remember for lots of different reasons that its not good to bank where you owe.

I don't believe this is correct. After the debt is discharged your creditor cannot take any action to collect on it. I still have my checking account with Bank of America and owed them over 50k they never tried to do anything.

[rdknipp]

Its unfortunately not that simple. Different districts do things different ways - and I would not purport to know California's quirks. But just because a bank doesn't exercise their rights, doesn't mean they don't exist. It is my belief that if you had any money in your account at the time of filing you will want to take it out ASAP. I do believe that federally backed banks (wells fargo, boa) have more of a limited to right to set off due to the FDIC. But you need to look at it a different way. When you put money in a bank, you are loaning that money to the bank. They promise to pay you back, sometimes with interest. In the scenario of bank accounts, you are the creditor. Why would it be okay for you to refuse to pay their loan to you back, yet expect them to pay your loan to them back?

The right to set off survives the bankruptcy. Perhaps this is outdated and if so I'd love to read any opinions on how its changed. It's for a chapter 13 but the law/theories would apply to a 7. Check out this case Citizens Bank of Maryland v. Strumpf 526 US 16 (1995) - I tried to post a link but I haven't posted enough messages to be allowed.

It may be convenient, but it is not good financial planning to keep any significant amounts of money in a bank that you also have a credit card or a loan through.

[LadyInTheRed]

Here's a like to the Citizen's Bank Case: http://www.law.cornell.edu/supct/html/94-1340.ZO.html

The case concerned deposits of the debtor that existed on the date of filing. The OP was discharged over a year ago and is worried about money deposited in the account after discharge, now that she is working. Assuming the debt in question was in fact discharged, the bank cannot use money deposited after discharge to offset the debt. If the bank had a right of offset when the BK was filed, it could have offset against the balance in the account at filing time. Whether they can go back over a year later and take an amount equal to the filing date balance, I don't know. But, it sounds like there wasn't much there and the OP is probably not so worried about that amount.

It's probably still a good idea to open an account elsewhere. Banks have been known to freeze accounts they have no right to take. It's easier to keep that from happening than to fight the bank later.

FDIC member banks like Wells Fargo and Bank of America cannot offset against credit card debt. If anyone has other types of debt, they should read the loan documents carefully and check state law regarding rights to offset.

As already stated, it's a good idea as a general rule not to keep your money at a bank to which you owe money. Then you don't have to worry about offset.

[mikeinsurpri]

Remember one thing, if the bank takes your money whether right or wrong, do you have the money to hire a lawyer to go back and fight it if it gets to that point? These big banks have hundreds of lawyers on staff and could tie anything up in court for years. I think the best advice is to close the account and switch to another bank. If you read through the forum, Wells Fargo hasn't had the best reputation.