I did not file BK & Wells Fargo Froze ALL of my FUNDS! PLEASE HELP!

[Bell30656]

I think you will need to see an attorney. Having her on the account may make that money partially hers regardless of who put it in the account.

[despritfreya]

I am reposting this from another thread from today. Unlike some of you savy forum users I have no clue how to contect the link. Sorry for the repost and its length. It does confirm an earlier post in this thread that had a link to the BAP decision discussed below.

__________________________

I routinely advised my clients to get their $$ out of Wells Fargo before filing bk. I did this as Wells Fargo had a national policy to freeze accounts once the bk hit. I believed Wells Fargo was taking the law into its own hands and was wrong. In June, 2010 the 9th Circuit Bankruptcy Appellate Panel (BAP) handed down a decision which ratified my beliefs. It is/was improper for Wells Fargo to exercise control over the funds and you should seek sanctions against it. For your reference below are excerpts from the BAP decision. Again, this is a long post but well worth the effort to read as Wells Fargo got its hand slapped. OP, California is in the 9th Circuit therefore this ruling is binding upon Wells Fargo. The exception would be if the Debtor owes money to Wells Fargo. If she does then Wells Fargo had the right of offset and you will have to prove those funds belong to you to get them back. But read on:

__________________________

In re Mwangi (Case No. NV-09-1408, 9th Cir. BAP June 30, 2010) (This decision was ordered to be published but I do not have the official cite.)

As part of its standard, national procedures, each night Wells Fargo Bank, N.A. (“Wells Fargo”) runs a computerized comparison of all newly filed Chapter 7 bankruptcy cases against its list of account holders. Upon discovering that Appellants had filed a chapter 7 petition, Wells Fargo “froze” Appellants’ accounts and sent a letter to the chapter 7 trustee, seeking instructions as to disbursement of the funds. No directions were forthcoming from the trustee. The debtors, claiming 75%of the funds in the accounts exempt, demanded that Wells Fargo release funds to them. When Wells Fargo refused, Appellants sought sanctions for willful violation of the automatic stay. The bankruptcy court held that the exempt funds in the accounts were not property of the bankruptcy estate. As a consequence, it determined that Wells Fargo’s failure to release the funds did not constitute a violation of the automatic stay where the record did not establish that Wells Fargo was attempting to “collect, assess or recover” a prepetition claim it had against Appellants.

We REVERSE and REMAND for further proceedings.

The bankruptcy court’s ruling was premised on its holding that exempt property never becomes property of the bankruptcy estate but remains at all times a debtor’s property. Accordingly, the bankruptcy court determined that no provision of § 362(a) covering property of the estate protected the account funds claimed exempt. . . Finally, the bankruptcy court determined that because Wells Fargo took no action to “collect, assess or recover” a prepetition claim it had against Appellants, it did not violate the automatic stay.

Despite the suggestions from Wells Fargo to the contrary, and the determinations of some other courts that have considered Wells Fargo’s national policy, the Supreme Court’s decision in Strumpf (which dealt with a creditor’s right to setoff), although instructive, does not authorize the type of administrative freeze on bank accounts imposed by Wells Fargo in the dispute before us. . .

Notwithstanding the limited holding in Strumpf, one bankruptcy court has stated broadly:

“The Supreme Court has held that an administrative freeze on an account, which is a promise to pay, does not violate § 362(a)(3) because the freeze constitutes neither a taking of property from the debtor nor an exercise of dominion over the debtor’s property. (In re Calvin), 329 B.R. 589, 603 (Bankr. S.D. Tex. 2005).”

We believe the Calvin court overlook the context and limited application intended by the Supreme Court in its decision in Strumpf. Significantly, Wells Fargo concedes that the account funds are property of the estate (and it was not exercising any right to setoff). . . In fact, Wells Fargo represents that its national policy is not motivated by any right to protect setoff rights generally. . .

Because Wells Fargo is not attempting to protect setoff rights, the “exception” to turnover of funds in a deposit account recognized by Strumpf does not apply in this case.

Wells Fargo does not dispute that under its national policy it routinely holds, and in this case held, property of the estate which is subject to the turnover provisions of § 542(b). It is undisputed that Wells Fargo did not turn over the account funds to the trustee. However, Wells Fargo asserts that § 542(b) only “obligated [it] to pay [the account funds] . . . to the trustee or his order.” In light of the absence of the Strumpf setoff issue, we might expect Wells Fargo to address what other “exception” might apply to the requirement that Wells Fargo immediately turn over the account funds. But here, Wells Fargo appears to assert that no “exception” is required. It contends that its “administrative pledge” in this case, when coupled with its letter to the trustee seeking instructions, complies with the turnover provisions of § 542(b), because it stood willing and able to pay the funds to the trustee “on his order.” The trustee did not request turnover of the account funds. End of story, says Wells Fargo. What happened to the funds was up to the trustee, and therefore out of Wells Fargo’s control.

In this regard, however, Wells Fargo fails to recognize that turnover issues are not coextensive with issues relating to application of the automatic stay. As we pointed out in the Abrams decision, “the failure to return property of the estate with knowledge of the bankruptcy is a violation of both the automatic stay and of the turnover requirements of the Bankruptcy Code. See also In re Carlsen, 63 B.R. 706, 711 (Bankr. C.D. Cal. 1986). For that reason, we believe it is irrelevant whether Wells Fargo’s national policy of holding the account funds until requested by the trustee to release them might have been in technical compliance with § 542(b). . .

Section 362(a)(3) expressly prohibits “any act . . . to exercise control over property of the estate.” Wells Fargo asserts it did not exercise control over property of the estate. We disagree. Wells Fargo could have paid the account funds to the trustee; it did not. Wells Fargo could have released the account funds claimed exempt to the Appellants when demand was made; it did not. Wells Fargo could have sought direction from the bankruptcy court, by way of a motion for relief from stay or otherwise, regarding the account funds; it did not. Instead, it chose to hold the funds until a demand was made for payment that it alone deemed appropriate. If that is not “exercising control over” the funds, we don’t know what is.

The impact of Wells Fargo’s national policy is to turn on its head the balance between rights of parties legislatively created. As a result of the policy, every party, except Wells Fargo, whose rights are impacted by the administrative freeze will need to take action.

When Wells Fargo took no action after receiving no instructions from the trustee as to how to disburse the account funds, which were indisputably estate property, Wells Fargo “exercised control” over those funds, and it violated the automatic stay. On remand, the bankruptcy court should determine whether Wells Fargo’s continuation of the administrative freeze and retention of the account funds claimed exempt, in the absence of instructions from the trustee, was reasonable in light of the Appellants’ demand that the subject account funds be released for their use. If the bankruptcy court determines that Wells Fargo’s conduct entailed a willful violation of the stay under § 362(a), then the bankruptcy court will need to determine what, if any, damages the Appellants are entitled to under § 362(k)(1). We leave those determinations to the bankruptcy court.

______________________

Des.

[helpme2010]

I would think a good BK attorney could contact your bank and threaten them if immediate action isn't taken. This is one reason why I recommend everyone hire a really good bk attorney. The bank probably has no fear of you, but would be scared to mess with your attorney.

[helpme2010]

I have a checking account with Chase who bought up my last bank WM. I also owed a lot of money on my Chase Visa card. So I asked my lawyer if they could freeze my checking account or deduct the money and he said no. Maybe because its chase or maybe because I am in California?

Either way just to be safe, I say keep enough money to pay your bills with and move the rest to another bank if you are scared. Or open up another bank account with another bank. If you are afraid of this, take cash to a place like Walmart and pay your bills with cashiers checks. I think it's around 50 cents or so to get a cashiers check. It's a pain, but it may help you if you have no checking account.

[randian]

Will Wells Fargo freeze your account even if you don't owe them any money?

[gman]

Here is my story... what should i do?

HELP PLEASE! I HAD THE EXACT SAME THING HAPPEN TO ME. I did not file for BK, but my long time friend filed for bankruptcy7 and she is on my account! She did not include any of my money or assets in the exemptions and failed to keep inform of what she was doing, like an idiot she failed to investigate and had a preparer prepare the paperwork and simply filed. It is thanksgiving, and hopefully you are reading this and can reply. I need the name of your attorney to help me out of this. I have 0 funds, no money, and am hopeless! I have nothing to do with her bankruptcy yet WF took all of my funds. She is LITERALLY responsible for ZERO of the dollars on in my account. I have rent due, bills coming out of the account and SCARED!

I need guidance, should she file a dismissal? But i read that requires judge approval and when the judge makes their decision it is based on the BEST INTEREST of the CREDITORS, not the debtor. So will they take my money and claim it to be part of her estate/assets?

Should she file an emergency motion?

Should she call the trustee so they call WF? (Since they notoriously do this, and need a trustee cal to release funds?)

Or Should she call WF and argue the fact?

Can you refer the attorney you used in this matter? HELP!

If anyone can refer me to a reputable attorney OR TAKE THE TIME TO ANSWER MY QUESTIONS I would be forever grateful - in the LA area.

For what it is worth - in my situation I got this "fixed" in 48 hours.

There are 3 areas you should immediately apply pressure:

1 - Credit Union themselves. But you need to go up high on the ladder and make a polite, but firm suggestion that they'd be wise to release the hold on any funds ASAP as there is case law out there that shows they do not have the legal standing to do this (even though it may be their official policy - it does not make it legal.) Where things can get tricky is if your friend also is BEHIND ON PAYMENTS to this same company. I had a car loan with mine - but was never late. Once I mentioned in a polite but firm manner that I'd rather NOT get my lawyer involved - they released the funds within a few hours. The key again was to get someone at the VP or above level on the phone (or in person.)

2. Trustee - I had a call in to the bankruptcy trustee saying I needed his help as this account was used to pay everyday expenses. Even my weekly unemployment check was being deposited there - and the credit union had no right to keep me from those funds. Did my trustee help? No....but only because I got the credit union to fix it before I had to use his leverage.

3. The Judge. Assuming #1 and #2 fail (and making sure you keep a log of all calls, and copies of all emails, I would have made an emergency motion to have the funds released. I understood from others that even an emergency might take 10 days to sort it out....but my likelihood of 'winning' was strong.

At day's end - the court knows a debtor has to eat, pay the mortgage/rent, etc. As long as the funds are used for that purpose (and not for extravagant purchases, there is no logical or legal reason to keep the funds frozen.)

Best of luck....keep us posted.

[despritfreya]

Spoke to wells fargo and they REQUIRE instructions from the trustee, either in writing or email, before releasing the funds. Keep in mind that my FRIEND filed bankruptcy, not I, and she owes them 0 dollars. Her debt is with other lenders, and it may be cross collateralize but WF refuses to disclose that information.
According the person on the phone, the ONLY reason they froze my funds is because it is their bank policy to do so, and for no other reason.

1. Print out my post as it gives you the authority you need.

2. Contact the bankruptcy department and demand your money. Remind the idiot on the line of the case authority which is binding on the bank. If you get no where print out this response and e mail or fax both to the idiot demanding the return of YOUR money by the close of business Monday. If money is not paid hire an attorney to sue in bk court. The attorney would file for an Order to Show Cause why sanctions should not be imposed. Besides sanctions (and I have no doubt that the judge will be extremely pissed off), you will be entitled to recover all of your attorney's fees from the bank pursuant to the US Supreme Court case of Travelers. Wells Fargo is in serious violation of the law and now that violation is willful which means it could get a huge sanction.

Quite frankly, if I was licensed in California I would jump on this one.

Please keep me posted. Can't wait for Wells Fargo to pull this crap in one of my cases.

Des

[robertr1784]

Spoke to wells fargo and they REQUIRE instructions from the trustee, either in writing or email, before releasing the funds. Keep in mind that my FRIEND filed bankruptcy, not I, and she owes them 0 dollars. Her debt is with other lenders, and it may be cross collateralize but WF refuses to disclose that information.

According the person on the phone, the ONLY reason they froze my funds is because it is their bank policy to do so, and for no other reason.

[chicagoannie]

Oh my God (and I rarely say that) WF froze accounts of people who did not even owe them money just because they filed?! That is unbelievable.

[despritfreya]

I routinely advised my clients to get their $$ out of Wells Fargo before filing bk. I did this as Wells Fargo had a national policy to freeze accounts once the bk hit. I believed Wells Fargo was taking the law into its own hands and was wrong. In June, 2010 the 9th Circuit Bankruptcy Appellate Panel (BAP) handed down a decision which ratified my beliefs. It is/was improper for Wells Fargo to exercise control over the funds and you should seek sanctions against it. For your reference below are excerpts from the BAP decision. Again, this is a long post but well worth the effort to read as Wells Fargo got its hand slapped. OP, California is in the 9th Circuit therefore this ruling is binding upon Wells Fargo. The exception would be if the Debtor owes money to Wells Fargo. If she does then Wells Fargo had the right of offset and you will have to prove those funds belong to you to get them back. But read on:

__________________________

In re Mwangi (Case No. NV-09-1408, 9th Cir. BAP June 30, 2010) (This decision was ordered to be published but I do not have the official cite.)


As part of its standard, national procedures, each night Wells Fargo Bank, N.A. (“Wells Fargo”) runs a computerized comparison of all newly filed Chapter 7 bankruptcy cases against its list of account holders. Upon discovering that Appellants had filed a chapter 7 petition, Wells Fargo “froze” Appellants’ accounts and sent a letter to the chapter 7 trustee, seeking instructions as to disbursement of the funds. No directions were forthcoming from the trustee. The debtors, claiming 75%of the funds in the accounts exempt, demanded that Wells Fargo release funds to them. When Wells Fargo refused, Appellants sought sanctions for willful violation of the automatic stay. The bankruptcy court held that the exempt funds in the accounts were not property of the bankruptcy estate. As a consequence, it determined that Wells Fargo’s failure to release the funds did not constitute a violation of the automatic stay where the record did not establish that Wells Fargo was attempting to “collect, assess or recover” a prepetition claim it had against Appellants.

We REVERSE and REMAND for further proceedings.

The bankruptcy court’s ruling was premised on its holding that exempt property never becomes property of the bankruptcy estate but remains at all times a debtor’s property. Accordingly, the bankruptcy court determined that no provision of § 362(a) covering property of the estate protected the account funds claimed exempt. . . Finally, the bankruptcy court determined that because Wells Fargo took no action to “collect, assess or recover” a prepetition claim it had against Appellants, it did not violate the automatic stay.

Despite the suggestions from Wells Fargo to the contrary, and the determinations of some other courts that have considered Wells Fargo’s national policy, the Supreme Court’s decision in Strumpf (which dealt with a creditor’s right to setoff), although instructive, does not authorize the type of administrative freeze on bank accounts imposed by Wells Fargo in the dispute before us. . .

Notwithstanding the limited holding in Strumpf, one bankruptcy court has stated broadly:

“The Supreme Court has held that an administrative freeze on an account, which is a promise to pay, does not violate § 362(a)(3) because the freeze constitutes neither a taking of property from the debtor nor an exercise of dominion over the debtor’s property. (In re Calvin), 329 B.R. 589, 603 (Bankr. S.D. Tex. 2005).”

We believe the Calvin court overlook the context and limited application intended by the Supreme Court in its decision in Strumpf. Significantly, Wells Fargo concedes that the account funds are property of the estate (and it was not exercising any right to setoff). . . In fact, Wells Fargo represents that its national policy is not motivated by any right to protect setoff rights generally. . .

Because Wells Fargo is not attempting to protect setoff rights, the “exception” to turnover of funds in a deposit account recognized by Strumpf does not apply in this case.

Wells Fargo does not dispute that under its national policy it routinely holds, and in this case held, property of the estate which is subject to the turnover provisions of § 542(b). It is undisputed that Wells Fargo did not turn over the account funds to the trustee. However, Wells Fargo asserts that § 542(b) only “obligated [it] to pay [the account funds] . . . to the trustee or his order.” In light of the absence of the Strumpf setoff issue, we might expect Wells Fargo to address what other “exception” might apply to the requirement that Wells Fargo immediately turn over the account funds. But here, Wells Fargo appears to assert that no “exception” is required. It contends that its “administrative pledge” in this case, when coupled with its letter to the trustee seeking instructions, complies with the turnover provisions of § 542(b), because it stood willing and able to pay the funds to the trustee “on his order.” The trustee did not request turnover of the account funds. End of story, says Wells Fargo. What happened to the funds was up to the trustee, and therefore out of Wells Fargo’s control.

In this regard, however, Wells Fargo fails to recognize that turnover issues are not coextensive with issues relating to application of the automatic stay. As we pointed out in the Abrams decision, “the failure to return property of the estate with knowledge of the bankruptcy is a violation of both the automatic stay and of the turnover requirements of the Bankruptcy Code. See also In re Carlsen, 63 B.R. 706, 711 (Bankr. C.D. Cal. 1986). For that reason, we believe it is irrelevant whether Wells Fargo’s national policy of holding the account funds until requested by the trustee to release them might have been in technical compliance with § 542(b). . .

Section 362(a)(3) expressly prohibits “any act . . . to exercise control over property of the estate.” Wells Fargo asserts it did not exercise control over property of the estate. We disagree. Wells Fargo could have paid the account funds to the trustee; it did not. Wells Fargo could have released the account funds claimed exempt to the Appellants when demand was made; it did not. Wells Fargo could have sought direction from the bankruptcy court, by way of a motion for relief from stay or otherwise, regarding the account funds; it did not. Instead, it chose to hold the funds until a demand was made for payment that it alone deemed appropriate. If that is not “exercising control over” the funds, we don’t know what is.

The impact of Wells Fargo’s national policy is to turn on its head the balance between rights of parties legislatively created. As a result of the policy, every party, except Wells Fargo, whose rights are impacted by the administrative freeze will need to take action.

When Wells Fargo took no action after receiving no instructions from the trustee as to how to disburse the account funds, which were indisputably estate property, Wells Fargo “exercised control” over those funds, and it violated the automatic stay. On remand, the bankruptcy court should determine whether Wells Fargo’s continuation of the administrative freeze and retention of the account funds claimed exempt, in the absence of instructions from the trustee, was reasonable in light of the Appellants’ demand that the subject account funds be released for their use. If the bankruptcy court determines that Wells Fargo’s conduct entailed a willful violation of the stay under § 362(a), then the bankruptcy court will need to determine what, if any, damages the Appellants are entitled to under § 362(k)(1). We leave those determinations to the bankruptcy court.

______________________

Des.

[BROKEDED]

My first suggestion would be to go to the bank that holds your checking account and explain your situation. Open a NEW checking account with them and ask them for a loan big enough to cover your monthly expenses for 1, 2, or 3 months and get a term long enough to keep the payments low to make sure you don't get behind on YOUR bills. Use your coming income to start making payments on the loan. Then work on proving that your friend does not contribute to your account. When you get your money back from Wells Fargo, pay off the loan pronto. Finally, beat your so called friend about the head for a good length of time. Throw in a swift kick in the pants for good measure.

[chicagoannie]

Wow, I cannot offer any different advice than others have posted, but what a DREADFUL situation. I hope you get it worked out somehow. Definitely open a new account at another bank TODAY, in your name only. I have a friend whose bank account got froze by a creditor almost 6 weeks ago and it is still not released. She had very little cash in it (and it was HER money, no one elses!) but it was still an awful shock to her to find out she had no access to her child support money or paycheck.

[robertr1784]

My friend did not mention the account in the BK. The account has LOTS of money and she has LOTS of debt. Wells Fargo BK department opens in 30 minutes. And the courts open at 9am. We will try and contact both while calling attorneys. What a mess!

The MOST horrible part of this situation is that is my ONLY Account, i have 0 money. I am on a commission only job, and having cash on hand is important, as closings come once a month or more. This is the most horrible thing that could happen.

[scorpion35]

HELP PLEASE! I HAD THE EXACT SAME THING HAPPEN TO ME. My long time girlfriend filed for bankruptcy and she is on my account! She did not include any of my money or assets in the exemptions and failed to keep inform of what she was doing, like an idiot she failed to investigate and had a preparer prepare the paperwork and simply filed. It is thanksgiving, and hopefully you are reading this and can reply. I need the name of your attorney to help me out of this. I have 0 funds, no money, and am hopeless! I have nothing to do with her bankruptcy yet WF took all of my funds. She is LITERALLY responsible for ZERO of the dollars on in my account. I have rent due, bills coming out of the account and SCARED!

I need guidance, should she file a dismissal? But i read that requires judge approval and when the judge makes their decision it is based on the BEST INTEREST of the CREDITORS, not the debtor. So will they take my money and claim it to be part of her estate/assets?

Can you refer the attorney you used in this matter? HELP!

If anyone can refer me to a reputable attorney I would be forever grateful - in the LA area.

shes on your account ,she filed bk ,WF froze your account standard practice for WF it will take awhile if ever to get that account unfrozen and your money back

[keepinitreal]

Here is my story... what should i do?

HELP PLEASE! I did not file for BK, but my long time friend filed for bankruptcy7 and she is on my checking/savings account! We are not married or related! She did not include any of my money or assets in the exemptions and failed to keep inform of what she was doing, like an idiot she failed to investigate and had a preparer prepare the paperwork and simply filed. It is thanksgiving, and hopefully you are reading this and can reply. I need the name of an attorney to help me out of this or a reply to my questions. I have 0 funds, no money, and am hopeless! I have nothing to do with her bankruptcy yet WF took all of my funds. She is LITERALLY responsible for inputting ZERO of the dollars in my account. I have rent due, bills coming out of the account and am SCARED!

I need guidance, should she file a dismissal? But i read that requires judge approval and when the judge makes their decision it is based on the BEST INTEREST of the CREDITORS, not the debtor. So will they take my money and claim it to be part of her estate/assets?

Should she file an emergency motion?

Should she call the trustee so they call WF? (Since they notoriously do this, and need a trustee cal to release funds?)

Or Should we call WF and argue the fact?

Or is the best bet spending lots of money on an attornet?

Can you refer the attorney you used in this matter? HELP!

If anyone can refer me to a reputable attorney OR TAKE THE TIME TO ANSWER MY QUESTIONS I would be forever grateful - in the LA area.

If it were me, I would open a new checking account today (Friday, day after Thanksgiving) and move all of my auto-deposit and auto-pay accounts to the new account. Then I would fight WF and try to get my money back from them asap. I have heard that sometimes it can take months, so you have to prepare for not having that money in WF for a while, possibly never.

It sucks and it's not fair, but you need to get a new account and start over in addition to fighting WF.

Good luck!