bank accounts

[teddyselkirk]

I'm trying to help my gf figure this out. She was reading about this and is confused. (Filing a BK7)

Attorney seems to be telling her to spend down her bank account, but leave it open?

Why not close it?

If she closes it, does she report the closed account to the BK Court?

Thanks

[backtoschool]

It's harder to get a bank account after filing bankruptcy.

Whether the account is closed or open, the trustee will still want to see statements going back anywhere from 3 months to 2 years. (2 years is if the US Trustee gets involved in her case)

[teddyselkirk]

Well would ir be better for her to file and then I open an account in my name? I'm confused.

[backtoschool]

Well would ir be better for her to file and then I open an account in my name? I'm confused.

She is filing bankruptcy not you. If you are worried that her bankruptcy will cause the bank to close her account, then that would be a reason to open your own account, but if you are trying to show separation of finances (I am assuming this from your other threads), then having a separate account now will not matter, since the trustee will be looking back three months to two years anyway when you were sharing an account.

That being said, YOU are not filing for bankruptcy so, your transactions will not be questioned by the trustee in regards to your own finances, they may only be questioned by the trustee in regards to whether she was improperly transferring you money, etc....

[AngelinaCat]

If she has credit cards or a loan, say car or home mortgage or other loan with the same bank that she has her checking/savings accounts with, she runs the risk of what is called 'cross-collateralization'.

That is, once she falls behind in the payments to the cards or loans, the institution may choose to debit the payment from her checking/savings accounts without warning. This can cause her to be overdrawn on other payments she is trying to make. Then she has to deal with all the NSF fees and all that extra stress.

For that reason, the general advice is to close the cheking/savings accounts and open new ones in a bank that there are no other ties with. She can do it now before filing, but she will need to be able to show at least six months of bank statements.

And yes, for a Ch7 our attorney told us to have our checking account as close to a zero balance as possible. We were actually at a negative balance so that was not a problem. The reasoning is that day you file, your bank account should reflect a 'snapshot' of your financial situation. At least that is how it was explained to me.

I hope this helps. Good luck!

[Chowder]

... the trustee will still want to see statements going back anywhere from 3 months to 2 years.

Not always. Depends on Trustee/district.

All I had to provide was a printout of account balance the day of filing.

[backtoschool]

Not always. Depends on Trustee/district.

All I had to provide was a printout of account balance the day of filing.

Yes of course you are right, your mileage may vary. But in another thread the OP described his girlfriend's situation and she mixed business and personal expenses in her bank account, so I think this situation is a good candidate for the trustee looking at the statements.

[teddyselkirk]

Ugh. My head is spinning. Yeah in other news, I just re evaluated the situation and realized I had money from a hobby going to a bank account in her name. (As everyone will see, I always let her handle the money, even though its stupid of me).

But this was actually her question, originally.

I still am unsure what she should do. Seems it does not matter.

If I stop my hobby and no money goes into her account, and I open my account and put the money there, do I get in trouble?

This sounds bad, I'm sure. I am an idiot.

[lrprn]

If I stop my hobby and no money goes into her account, and I open my account and put the money there, do I get in trouble?

You didn't file bankruptcy, so you can do whatever you want, including opening a new account and depositing your own money in it. You have nothing to worry about here. Just don't allow your gf to have anything to do with your new account or any other financial dealings of yours from now on. It's time to start handling your own finances.