Overdraft from debit card before filing

[iwannawon]

Sorry if this isn't the right place for this.

I'm considering chapter 7 for my credit card debt. I also have another credit card attached to my checking account used as overdraft protection. Since i'm overbudget each month, how likely is it that the whole overdraft balance will be approved in the bankruptcy? It's sort of a cash advance, i guess. but it isn't for a large amount that i've read they see as abuse. It's a series of small advances, per purchase, if I don't have enough to cover monthly expenses, rather than bouncing. Could they not allow, say, the last 90 days of overdrafts? Does anyone have experience or knowledge about this?

Also, will this impact my ability to stay at the same bank or do i need to consider switching banks too?

Many thanks,

[LimpDisc]

If you plan on including the overdraft charges into your bankruptcy I would suggest changing banks. It's recommended on this forum quite often to not have checking\savings accounts at anywhere you owe money to. I would imagine that your current bank will close out that account anyways.

[Calthius]

Also I would recommend to have the overdraft protection stopped. Make a budget and try to live with-in your means. Have you met with a lawyer?

[backtoschool]

Make sure that you are current in your checking account before you try to go switch to another bank. If you have an overdraft that is unpaid, then you will be in chexsystems and it will be really difficult to get another account.

[iwannawon]

thanks all. a few follow ups. yes i've spoken with a lawyer but the overdraft wasn't really discussed. at least not yet. the overdraft is just a credit card so i'm not sure how it will put me in another system and affect my ability to get an account somewhere else. it just gets added to any purchase balance i might have. the same bank holds my student loan, mortage, savings accounts, etc. will anything else be affected? i can't really move everything to a new bank. just my checking/savings. the laywer didn't mention switching either. i guess i better bring it up with him. thanks.

[backtoschool]

Depending on the bank, your savings accounts may be affected.

[iwannawon]

forever or just during the process? currently, they're empty. hence the need for bk.

[backtoschool]

forever or just during the process? currently, they're empty. hence the need for bk.

If you bk on a credit card at a bank, they often will close your other accounts, taking whatever balances were in the accounts at the time.

It depends on if the bank has a cross collateralization or offset clause.

Also, in regards to chexsystems, if you bk on your overdraft line, that will immediately stop it, which means that any overdrafts will get recorded as overdrafts on your checking account, which will put you in chexsystems. That is why it is important to open up a new account before you endanger the overdraft line.

[iwannawon]

i see. makes sense. thanks

[BkinTX]

We had overdraft protection tied to a CC, and had "cash advances" EVERY MONTH when we would overdraw.

We stopped using cards and overdrawing only a month or so before filing. It was not a problem at all. YMMV.

[iwannawon]

We had overdraft protection tied to a CC, and had "cash advances" EVERY MONTH when we would overdraw.

We stopped using cards and overdrawing only a month or so before filing. It was not a problem at all. YMMV.

did you switch banks? thanks.

[BkinTX]

Yes we did. Before we filed (like the DAY before) we went in and closed out our account. We had already opened up a new acct at a different bank and had re-routed the auto pays that we were keeping.

[christine12]

we had this exact thing happen. In fact, almost the entire 10K on that particular cc was all overdraft advances from the previous year. I got really good at sticking my head in the sand. It was recommended that I wait 70 days before filing so I stopped the overdraft protection, switched banks and stopped paying my cc's - lived on cash (which you got to get used to doing anyway) for and filed about 2.5 months later. I had no problems at all with my discharge. We were under median by about 20K per year and had were negative $500 a month on the budget that was prepared using the irs allowances so there wasn't any real questioning from the trustee, the bank did not contest the charges either. I hope you have the good luck that we did!

[iwannawon]

I hope you have the good luck that we did!

again, thanks all. this is a great resource. i've been pretty nervous about everything. glad i found this site. we're slightly above median but are more negative on the budget. not sure if we'll be able to wait 70 days but i guess if we stop paying everything it's the same anyway. i wasn't advised to wait. might have to consult with someone else. seems like there was a lot that wasn't discussed.