What becomes of your bank account during bankruptcy?

[lillymarlene]

For what it's worth, I opened one business checking account before I filed chap 13 last year. Then, also a personal checking account, in the bank that held my mortgage, survived. Of two other accounts: one was closed by the bank, and the other I no longer use since, I had to include a line of credit I had with that bank in my bk.

[discouraged]

What I did was to take all money out of the bank I was with since I was filing they were included as I had a cc with them, open a new account with a local bank and keep most of my money under my mattress, so to speak. Actually, I had it hidden all over my house, which constantly worried me - ie: what if there was a fire, etc.

Just before my bk was filed, I opened a new account with another neighborhood bank, since the bank I'd previously chosen was Wells Fargo (not a good idea as you've read) and now keep most of the money in savings and transfer as needed for expenses.

[LadyInTheRed]

Not a problem lots. That's what we're here for. I was in your shoes this time last year. I filed on August 20, 2010. Withdraw all your money and close your bank account about 1 day before you file. After you file, open a new bank account.

That's pretty conservative advice. It won't hurt to take the advice as long as you list the cash you withdraw as an asset on your BK petition.

Wells Fargo is known for freezing accounts when people file bankruptcy and waiting for instructions from the trustee. But, that is illegal and they have been slapped for it. I haven't read about them freezing an account lately, but if you have a WF account, you might want to close it just to be sure. If you owe money to the bank where your account is located, and the bank is not a federally chartered bank, closing the account before filing is a good idea. There is no reason you can't open a new account at a different bank before you file. Other than that, you can keep the account open and keep using the account after you file. Just be sure to claim the balance on the date of filing as an asset and apply whatever exemptions you can to it. If you don't have exemptions to cover the entire balance, you should try to spend the cash on living expenses before filing. If you can't exempt the entire account and file a chap 7, you will have to pay the non-exempt portion to the trustee. If you file a chap 13, your plan will have to pay at least the non-exempt amount to your unsecured creditors.

[drowning123]

Not a problem lots. That's what we're here for. I was in your shoes this time last year. I filed on August 20, 2010. Withdraw all your money and close your bank account about 1 day before you file. After you file, open a new bank account. When do you plan on filing?

[lotsahats]

What will become of my checking account? Will I still be able to use it for regular, necessary transactions, like buying groceries, or paying rent? Or will it be (for lack of a better word) seized?

I know I keep flooding this forum with question after question, but I post them as they enter my mind. I always search the forum before posting, though.

I really appreciate everybody's help!