Bank Account Lien?

[Planetary]

Long story short, my wife and I had to file a Chapter 7 on about 80k worth of unsecured credit card debt due to to medical expenses for our young son over the past few years. The straw that broke the camel's back was both of us losing our jobs at the beginning of '09.

Our BK attorney gave us no indication we'd have a problem with any assets being seized including whatever money was in our checking account. However, we filed our paperwork on Wednesday and 3 days later this morning on Saturday, our checking and savings accounts both were frozen with every cent put on lien totaling about 14k. About 10k was a loan our parents gave us to get us through this rough patch. We pay all our bills through Bill Pay on our checking account, thus we face all these "bounced" payments. We now have zero money for mortgage, food, bills, etc aside from unemployment which we obviously can't deposit in our checking accounts.

I had asked our attorney several times about how "safe" our bank accounts were and he repeatedly said there's nothing to worry about as it was unsecured debt. After talking to him today, he said this was the first time in his 20 years of practice this has happened in such a situation. He really didn't sound too helpful as far as what our options may be at this point.

I guess my question to those that may know better is, are we screwed out of that money? Do we have *any* options? Although we have never been late on our car or house payment, we will quickly lose what little we have left as things stand without that "cushion" that was helping us keep it together through all this.

[StartingOver08]

Did your attorney exempt any of your cash in your petition?

Where did you file (state)?

Was your attorney a full time BK attorney?

[Planetary]

Did your attorney exempt any of your cash in your petition?

Where did you file (state)?

Was your attorney a full time BK attorney?

No, he didn't exempt any cash. We filed in California and yeah, our attorney is a full time BK.

[StartingOver08]

California has very large exemptions. Your attorney should have warned you because it is well known the Trustee gets all the cash over the exempted amount.

Look up your exemtions here: www.legalconsumer.com

Did you file under System 1 or System 2?

[Floridagail]

Was it a creditor from a judgment who froze your acct?

[lrprn]

First, I am so sorry to hear about your son's medical problems. I hope he is doing better now.

Was the financial institution a bank or credit union? Did you have other debts (a car loan, a credit card, an overdraft protection agreement, etc) with the financial institution?

I'm thinking that there was a cross-collateralization agreement in place that allowed your account holder to seize the money in your checking account if you had other payments to them in arrears at filing.

We are going to need more information about WHY the account seizure and freeze happened to help you sort out what options you might have to deal with it.

[HHM]

By chance do you bank with Wells Fargo.

Some banks will Freeze your funds when you file BK. It has nothing to do with a lien, or any thing like that, they are simply acting punitively toward you. It can be undone, but it is a hassle.

[phoenixrisin]

I am sorry that happened. They did the same to me last week. I still don't have a resolution, but my lawyer is working on it.

Apparently these things ARE rare. There isn't much data on the web about it. I feel they are going to become increasingly more common however. They levy'd my 3 bank accounts 3 times in 3 business days. 3 seperate creditors. I didn't have enough to cover the 1st levy- so all accounts were frozen. The 1st levy was for a $6k credit card debt! #2 was a $4k CC, and #3 was a $2k loan. I think everyone needs to be aware these people are doing these bank levys and putting liens on your house! For CC's!!

I understand sometimes a levy can occur pre-judgement, or post-judgement- with no notice to you. Or like HHM says- just because of filing BK.

Did you have enough in the bank to pay the amount levy'd? If you didn't the bank will not just hand over money. The burden of proof of "exempt" funds is on YOU. You have 21-30 days to try and get your money back- but I understand how panicked you feel right now. It is a nasty move by them to mess with you. Was yours done Friday afternoon?? Mine was right after I deposited a paycheck! I saw on the web somewhere that 80% of bank levys end with BK. Too bad NY states new law about bank garnishment doesn't apply nationally!! And the whole cross-collateralization (sp?) thing bites big time. And my bank charged me $150 for each levy. I now officially hate banks...

Find out who put the lien on the account- the bank will tell you the creditor, lawyer, and phone number.
Find out for how much.
Find out phone number and address of the banks legal dept- as that is who you need to deal with.
You will get notification by mail in a few days from the bank.
The bank has 21-30 days to respond to the lawyer that is working for your creditor.
Find the form online called something like "Motion for Release of Property from Levy/Garnishment or to Exempt Property from Execution" (this is a MD form but I would hope CA has something like it)

If your lawyer doesn't have a clear plan of what do to because it's so rare- file it yourself with the district court.

Keep in mind this is just my experience in the past week. I am not a lawyer. The time periods may not apply to CA.

Will you have a BK case number soon? That will stop this levy in it's tracks- but you have to act fast. Otherwise you/your lawyer will have to file the motion to release based on exemption and/or hardship.

And keep your chin up. You aren't alone!! Good luck!

[Planetary]

Going kind of backwards to answer some of the comments and questions in the thread:

First off, yes our checking/savings accounts are Wells Fargo.

As I mentioned before, we and our attorney filed the paperwork just this past 4/29th, immediately got a case number and court date within a day and the lien on our account(s) was placed on 5/1. I went to Wells Fargo today after discovering our accounts were frozen and as their legal department is closed on weekends, could only get a simple printout which showed the reason being "Assignment For Collateral" with the code "HRD HLD DIRDEPADV/DEP ADV ONLY." I was told I can call their legal dept first thing Monday and they would fax me the actual "order" showing the details of the lien including who had it placed.

I do not know if our Chapter 7 is "system 1 or 2." I looked through our BK filing paperwork and couldn't find anything that indicated this. If someone can tell me specifically which page or form I may find this on, I'm sure I can find it. What is the relevancy of this?

Answering the question regarding other debts, etc.... This was a joint personal filing, we have one car paid for (old 1996 Mazda 626) and one being paid monthly ('07 Honda Civic) and of course, our house which we are upsidedown by about $100k. We have not missed any payments on these debts - it's all strictly around 80k worth of CC debt that we are bankrupting. None of our CC debts have gone to court, all have been in collection by secondary agencies for about 4 - 5 months. The amount in our accounts totaled about 14k, far below the CC debt. As I mentioned as well, our income is fixed on unemployment at about $1,800 a month - our monthly bills toal around $6,000.

Last question answered - our son suffers from autism. A great deal of our debt was incurred fighting his school district to get him a decent level of services which we eventually did - it was well worth the fight.

[uneasy]

Wow. You guys have really been through the wringer--really sorry. I can't believe what happened to your bank accounts--it's pretty shocking. I'm really surprised that this is legal. How are you supposed to get by???

And, if this happened to you, it could happen to anybody, right? Makes me really nervous about having ANYTHING in the bank when I file--and even afterwards!!

Does anyone out there know if there is anything we can do to protect ourselves from this sort of thing? I don't want to be Uneasy forever . . .

[Doghouse]

Wow, sorry about your situation. This really re-inforces the message to anyone filing that you should immediately move your money from any bank or CU you owe sizable amounts and plan on including them in bankruptcy. Forget what any lawyer tells you. I moved my money from my CU of almost 25 yrs because of the debt I owed them.

Also banked with Wells Fargo and owe them almost $25,000 on my LOC and Visa card. I also have a WF checking and savings but moved all but $20 to my new bank the month I stopped paying back in Oct 08. Since I filed my bk on 4/24, the Visa account and Line of credit no longer appear when I log online to their website. It still shows both checking and savings accounts with the $20 as available. No messages about anything being frozen.

Regarding your frozen account, this is just standard protocol with Wells Fargo I've been told. You should have your funds available again soon. It's just the hassle and the missed payments you will encounter because you can't get your other bills paid. My lawyer had warned me about Wells Fargo specifically. Others had discussed it in threads like this one here - http://www.bkforum.com/showthread.php?t=30175

[Planetary]

Wow. You guys have really been through the wringer--really sorry. I can't believe what happened to your bank accounts--it's pretty shocking. I'm really surprised that this is legal. How are you supposed to get by???

And, if this happened to you, it could happen to anybody, right? Makes me really nervous about having ANYTHING in the bank when I file--and even afterwards!!

Does anyone out there know if there is anything we can do to protect ourselves from this sort of thing? I don't want to be Uneasy forever . . .

Clearly in retrospect, I don't it's prudent not to keep a significant portion of whatever money you have left, especially if it's your sole means of support in a bank account, at least under your social security number under this kind of circumstance. In my current situation, I now have no means to deposit money, write checks, pay bills other than to cash a check at a liquor store-type business that gouges a fee to do so and use money orders to pay bills (or do so when possible in person). Couple that with a very limited income that doesn't even cover our house payment, much less car, utilities, food and so on, well, to put it politely, we're hosed.

It's funny (not "ha-ha" funny) that I repeatedly asked our attorney if we should pull out our savings and just transact in cash at any time through this "just in case," and he assured us that due to our situation, we had nothing to worry about.

I have no idea how this is going to pan out in the days, weeks or months ahead.

[Planetary]

Wow, sorry about your situation. This really re-inforces the message to anyone filing that you should immediately move your money from any bank or CU you owe sizable amounts and plan on including them in bankruptcy. Forget what any lawyer tells you. I moved my money from my CU of almost 25 yrs because of the debt I owed them.

Also banked with Wells Fargo and owe them almost $25,000 on my LOC and Visa card. I also have a WF checking and savings but moved all but $20 to my new bank the month I stopped paying back in Oct 08. Since I filed my bk on 4/24, the Visa account and Line of credit no longer appear when I log online to their website. It still shows both checking and savings accounts with the $20 as available. No messages about anything being frozen.

Regarding your frozen account, this is just standard protocol with Wells Fargo I've been told. You should have your funds available again soon. It's just the hassle and the missed payments you will encounter because you can't get your other bills paid. My lawyer had warned me about Wells Fargo specifically. Others had discussed it in threads like this one here - http://www.bkforum.com/showthread.php?t=30175

One thing I didn't mention, Wells Fargo is not a debtor in our BK. We never had any credit cards or any loans of any sort with them. In fact, we've only had an account with them for under 6 months after leaving Bank of American after nearly 20 years due to several *major* screwups by BoA on our joint account in 2008.

[HHM]

One thing I didn't mention, Wells Fargo is not a debtor in our BK. We never had any credit cards or any loans of any sort with them. In fact, we've only had an account with them for under 6 months after leaving Bank of American after nearly 20 years due to several *major* screwups by BoA on our joint account in 2008.

This is standard practice for Wells Fargo.

[Doghouse]

One thing I didn't mention, Wells Fargo is not a debtor in our BK. We never had any credit cards or any loans of any sort with them. In fact, we've only had an account with them for under 6 months after leaving Bank of American after nearly 20 years due to several *major* screwups by BoA on our joint account in 2008.

What? Usually the cases I've read or heard involves owing them money. Wow, sorry, really feel for you as this may take sometime to undo the mess and unfreeze the funds.