Bankruptcy & Your Bank Account

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Bankruptcy & Your Bank Account

When filing for bankruptcy, your bank accounts will be counted among the assets you hold, but that does not necessarily mean that you will be forced to surrender the monies held in that account. Nor does it mean that your bank accounts will be automatically closed. Nevertheless, your relationship with your bank at the time of filing for bankruptcy can play a role in what happens to your account and the money in it. Specifically, if you owe your bank money, such as overdraft fees, mortgage payments or credit card debt, at the time of filing for bankruptcy, a bank may automatically take the money owed to it out of your account if the terms of its contract with you allow it to do so (as many financial institutions have contracts that do allow this). What’s possibly more scary is that these automatic withdrawals from your account may occur at any point during or after your bankruptcy if you have not payed the bank fees that it is owed.

One important step that can help people before they file for bankruptcy is opening another bank account with a different bank to which they do not owe money. Once a person’s money is transferred to a new account, it can prevent the first bank from automatically seizing payments for fees it is owed, which can then allow these debts to be discharged during the bankruptcy proceedings. Another good reason for opening up a new bank account before filing for bankruptcy is that, often, banks will not issue new checking or savings accounts to a person who has filed for bankruptcy for a period of years.

However, it is important to note that individual situations vary and bankruptcy proceedings can be very complicated; as a result, those who are considering filing for bankruptcy should consult with one of our skilled bankruptcy lawyer for experienced advice on what the options are for their particular situation.

2012-12-12T09:30:54+00:00
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