Well. I am about to join the chapter 7 statistic

[Nomoregreen]

Divorce is in process. Wife racked up 45k in credit card debt and 17 in car loan debt. Due to us separating I can't afford the payments. 45k of income.

Have not retained the lawyer yet though I did consult one. Any advice for the forthcoming events? Lawyer stated I did not need to move banks? Said my checking and savings would be fine?

[justbroke]

So long as our cash (demand deposit accounts such as checking and savings) are not at Wells Fargo, it should be fine to leave your accounts alone.

You really need the divorce and bankruptcy attorney to work together on a strategy!

[Nomoregreen]

Bank of america. I have credit cards and my car loans with them.

[leonel9]

It's generally advised not to have deposit accounts at the same bank where you have credit accounts you plan on including in a bankruptcy. This is especially true if you are going to stop paying those accounts, causing them to be 30, 60, 90 days late. Bank of America will simply transfer from your checking/savings accounts to pay the delinquent credit products.

Aside from what they will do BEFORE bankruptcy, consider banking with a company that you may plan on rebuilding credit with. At the credit union where I work, we make exceptions for people who are on the borderline from an approval perspective, but have a positive account history and direct deposit or a CD with us. Just something to think about.

[Nomoregreen]

For credit unions that is legal. Is it legal for national banks?

[leonel9]

For credit unions that is legal. Is it legal for national banks?

Im not an attorney, but my view is this: The same antidiscrimination laws should apply to all financial institutions equally. A plaintiff would have to prove that the criteria used unfairly discriminates against a protected class (e.g. Hispanics are unfairly treated because they often do not have direct deposit). Keep in mind this isnt a hard and fast rule - it's only one factor a loan officer can use in reversing what would otherwise be a decline decision.

The point here is that good relationships with financial institutions may be a factor in credit approvals.

Also, the OP may have a concern about BoA taking deposit account balances to offset credit obligations.

[LadyInTheRed]

For credit unions that is legal. Is it legal for national banks?

No, it is not legal. Federal Banks are prohibited from doing that.

[LadyInTheRed]

Im not an attorney, but my view is this: The same antidiscrimination laws should apply to all financial institutions equally. A plaintiff would have to prove that the criteria used unfairly discriminates against a protected class (e.g. Hispanics are unfairly treated because they often do not have direct deposit). Keep in mind this isnt a hard and fast rule - it's only one factor a loan officer can use in reversing what would otherwise be a decline decision.

Do you mean to say that financial institutions need to be protected by antidiscrimination laws? Or do you mean that all laws should apply equally to all institutions so that their customers get the same protections? Financial institutions are powerful enough to protect themselves. A financial institution can choose what kind of institution it wants to be. It chooses how to become licensed and must abide by the rules it chooses to be licensed under. Federal Bank rules protect all customers of federal banks equally. Credit union rules protect all members of credit unions equally. It is up to the customers/members to read and understand the contracts they enter into and decide what institutions they join and/or do business with. The law protects individuals in protected classes from discrimination, wherever they do business.

Remember that credit unions are owned by its members and all account holders are members. I suspect this is why they have less stringent consumer protection rules. A credit union is operated to benefit its members. A federal bank is operated to benefit its shareholders.

Also, the OP may have a concern about BoA taking deposit account balances to offset credit obligations.

But, the OP need not be concerned because BofA is a Federal Bank that cannot use deposit accounts to offset credit obligations. That is why his/her attorney said there is no need to change banks.

[Nomoregreen]

Will be able to keep my checking and savings account with bofa through the back
Bankruptcy? I am reaffirming a vehicle loan with them but burning them on credit cards
cards.

[LadyInTheRed]

Yes, you can keep your Bank of America checking and savings accounts.

I hope that vehicle loan you are reaffirming is not underwater. Do you know for sure that you have to reaffirm the loan. In most cases, you can keep a vehicle without reaffirming the loan, as long as you keep payments current.

If you are paying the car loan through a deduction from your savings account, be prepared for that to stop. I'm not talking about payments you set up through online bill pay. I'm talking about any payments that were set up using other methods. The bank will cancel automatic payments to avoid violating the automatic stay against collection. But, you can still voluntarily make payments using other methods.

[Nomoregreen]

The vehicle I am keeping has 6k in equity. Expemt through texas. I always make the transfer myself these days. My vehicle loan is through bofa too. Payments are current.

[leonel9]

Do you mean to say that financial institutions need to be protected by antidiscrimination laws? Or do you mean that all laws should apply equally to all institutions so that their customers get the same protections? Financial institutions are powerful enough to protect themselves.

In regards to financial institutions using direct deposit as a credit approval criteria, my comment was meant to suggest it could be considered illegal by either a bank or a credit union if it violated federal laws such as truth in lending, or unfairly discriminated against a protected class. In that case the type (bank vs. credit union) of financial institution would not matter, as they are both governed by many of the same federal laws (i.e. neither credit union nor federal bank may discriminate by race).

But, the OP need not be concerned because BofA is a Federal Bank that cannot use deposit accounts to offset credit obligations. That is why his/her attorney said there is no need to change banks.

My comment here is meant to only discuss the possibility of a security interest clause that may exist in a credit card disclosure, and that a financial institutions may choose to exercise. To be clear, I am only referring to a transfer funds from a checking/savings to a delinquent credit account prior to a customer receiving protecting from the automatic stay. For example, a customer decides to file bankruptcy, is advised to stop making payments on a credit card and a loan, and thereby becomes is past due on both accounts. If the customer hasn't filed bankruptcy, and has funds in a checking account with the same bank, the customer should be concerned about the bank's right of setoff for the delinquent loan, and (if applicable) a security interest clause included in the credit card disclosure.

Connecting this to the OP's question, I reviewed the Bank of America disclosure regarding the right of setoff. It would apply to the auto loan. If the OP plans on keeping it current, this is a non-issue. But if the OP decided to walk away from the auto loan and chooses to discharge in bankruptcy, the right of setoff may allow BoA to transfer funds from checking to the auto loan and bring it current.

Regarding the credit card, one disclosure I reviewed did not contain a "security interest" clause. As long as the cardholder agreement/disclosure for the OP's card does not contain this clause, the credit card is a non-issue. This may not be true for all bankruptcy filers, though, so it is may be a concern for others (especially those who have accounts at credit unions, which are more likely to apply these clauses).

Below are three links that may help explain this point. If there's a federal law that restricts either of what I just stated I would very much like to know about it. With that in mind, security interest on deposit accounts may be limited by state law.

http://www.abi.org/abi-journal/depos...ised-article-9
http://www.sbbolaw.com/limitations-t...t-obligations/
https://www.helpwithmybank.gov/get-a...offset-01.html

[Nomoregreen]

well crap. I just got advised by my divorce attorney to not start the bankruptcy until after the divorce is finalized

[justbroke]

well crap. I just got advised by my divorce attorney to not start the bankruptcy until after the divorce is finalized

This is typical. You would want your marital settlement agreement (MSA) in place so that you can then determine which portions can be discharged.

Remember when I wrote that you need the bankruptcy and divorce attorneys to work together on a strategy? Well, getting the divorce done first is the typical strategy. This is because you "may" be able to discharge some of the non-support related items that were part of that final settlement agreement in the divorce.

[Nomoregreen]

I was hoping to file before I was behind on credit card payments and vehicle loan #2. My only issue at this point.