Do you lose bank accounts when you file Ch 7?

[Brisco444]

My overdraft loan ($988) was included in my chapter 7. The bank has not closed the checking attached to that account. It only has $10 in it, but still. We used that account to direct deposit out taxes, so once the rebate hits we are closing it for good.

[downwardspiral]

Our bank accounts are fine, no negative balances or anything like that. We do have a credit card with each bankwe have that will be included in the Ch 7 filing. So yesterday we opened a new account with a bank we have no relationship with.

[jp2861]

I was wondering if my bank will cancel my account once they find out we have filed for Ch 7. Can they do that?

I'm sure this depends totally on the bank. I had a negative balance on one of my accounts that I listed on my petition. The amount was small but still considered a debt, so I listed it. I called them and told them what was happening early in the process. I took care of the deficit and put some savings money in it. They didn't close the account. This is a question only your bank can answer.

[lrprn]

You've gotten sound advice about keeping your account after filing from EP and JR.

One other thing to keep in mind is how much cash you have in your accounts. If your state exemptions can't protect all the cash when you file, then you need to start spending the account down to what can be protected.

Most lawyers advise spending the money on normal living expenses that you've been putting off (car repairs, clothing, health insurance, etc) before filing. Just keep all the receipts in case there are any questions about where the money went later.

Your lawyer can help you sort this out - he/she will be aware of what's ok to do in your local court and what isn't. Good luck!

[JRScott]

As ephiphany says depends on your circumstance.

1. If you have a loan or other debt at the bank that you plan to discharge during the course of the bankruptcy then you would be well advised to move the account to another bank or institution where you have no such obligation. The reason is that most cross collateralization clauses would allow the bank to seize the account for other default accounts.

2. If you have no other debt or obligation with the bank then you should be okay.

[epiphany]

I was wondering if my bank will cancel my account once they find out we have filed for Ch 7. Can they do that?

I assume you are talking about a checking account that you are not in default on and with an institution that you do not have any other financial obligations to?

If so, no...you probably won't lose your account. If you have any obligations to this bank that you are going to be defaulting on, you need to run, not walk, to another bank and open an account BEFORE the you make the S hit the fan. If this means changing your direct deposit, do it now.

Furthermore, if you do have checking obligations to this bank that you default on, you will have a very hard time opening another bank account. So, again, if you are going to need to open another checking account, do it NOW.

ep

[soleprop]

dang, another good question. in for this read as well.

[downwardspiral]

I was wondering if my bank will cancel my account once they find out we have filed for Ch 7. Can they do that?