Should we change banks before we file?

[Diesel73L]

My wife and I have separate bank accounts. I bank with Wells Fargo and my wife banks with a small local bank. We have no debts secured or unsecured with Wells Fargo, but I have heard that they will automatically freeze your accounts once they've found out that you filed. I thought about moving my money to my wife's bank, but they hold our mortgage. We are going to "stay and pay" and we have no other debt with them, so the BK will not really affect them, but is there a chance that they will freak out when we file and freeze the accounts there because they might think that we're going to walk away from the house? There is another small local bank near us that is well regarded in the community-should we just park our money there prior to filing?

[ValleYum]

I would change banks.

Why risk having your account(s) frozen and being without funds until you can get in touch with your attorney then have your attorney get in touch with your trustee who will then have to write a letter to the bank and ughhhhhhh the frustration!!

Just don't totally close either current account until after your BK is discharged and closed. Your BK petition asks specifically if you have closed any bank accounts in the last 2 years (I think it's 2 years) so why draw undue scrutiny to your petition by answering 'Yes' to that question?

[mountanddo]

I woudn't change banks if you have no debts with that bank. I didn't change banks and I was fine. I closed my savings account 2 months before I went to see an attorney and that question didn't come up. I was asked only about open accounts at the time of filing.

[ValleYum]

Was your account at WF, md?

They are well known for freezing accounts once they are notified of your BK "on behalf of the BK estate" not simply because you owe them $$. Big PITA to get it unfrozen, too.

Diesel said that his wife banks where they have their mortgage so... YMMV, but I would get away from both those banks while I was doing my pre-BK planning.

[Diesel73L]

I think I will take ValleYum's advice. We'll leave the minimum amounts in each account (it's $100 for WF-the local bank might not even have a minimum) and move the rest of the money to a new account. That way we aren't closing any accounts-we can figure out what we want to long term after we receive our discharge.

[ValleYum]

To me, it just makes sense not to risk it if you have the time to plan your BK.

Due to the sheer aggravation factor (at minimum) or not having funds to pay bills or buy groceries (worst case scenario) it seems prudent to open new account(s); particularly if you also have a tidy sum of exempted cash in your account(s). We did this by changing our direct deposits, etc. to an "uninvolved" bank and never had the first problem or issue.

[tobee43]

we left our account open in nj but didn't keep any money in it at ALL! ( i think maybe $25)

we opened two accounts in florida one was a credit union to help start our credit if we needed in in the future for a car loan etc.and then the smallest local bank we could fine. we only keep what we needed to pay our bills in them. it was an excellent accounting for the court to see our and where are money was going when we provided the bank statements.

[ValleYum]

It is definitely easier for the courts to see how you spend you money (if they need to) when using a bank - that is for sure, Tobee. I couldn't imagine the size of the box I would have needed to store receipts from a 'cash only' lifestyle.

[tobee43]

me either Valle. to me the bank statement showed consistency in our living habits and it gave the courts a birds eye view of our income on an in and out basis. i know many say pay everything in cash, but it's just a personal thing i guess, it would not be for me at all. i want to pull on one piece of paper showing what went where and when the courts see the same expenses for 6 months, i think it helps them make a better assessment of the case. IMHO.

i think many people go for the "cash" only when maybe they are concerned about garishes??

[MSbklawyer]

I've never heard of a bank freezing someone's account automatically upon filing bankruptcy. To do so would be a violation of the stay.

I sometimes advise clients to close bank accounts if they owe the bank money or if they have checks outstanding to check cashers. But I don't think it's necessary just as a matter of course.

Under Mississippi's exemption statute, money in bank accounts cannot be exempted, so I do advise clients to have a minimum balance in bank accounts on the day of filing.

[tobee43]

I've never heard of a bank freezing someone's account automatically upon filing bankruptcy. To do so would be a violation of the stay.

I sometimes advise clients to close bank accounts if they owe the bank money or if they have checks outstanding to check cashers. But I don't think it's necessary just as a matter of course.

Under Mississippi's exemption statute, money in bank accounts cannot be exempted, so I do advise clients to have a minimum balance in bank accounts on the day of filing.

first NICE to see you!! hope you holidays were fruitful

actually, i have heard numerous stories about wells fargo freezing accounts, it may have to do with a cross collateral situation, however, it affected their checking accounts.

on the day of our filing we had over 1k in the bank, however, the bills had not be paid as yet. it was consistant that the balance would have been just under $150 dollars once all the bills were paid. our bank statements also indicated where the 1k was going monthly..i.e. rent, utilities, even food. i just thought it was the best way to keep accurate records of our income so there would be less questions if they came up. the trustee never questioned the amount that very day.

[ValleYum]

Wells Fargo has had their hand smacked more than once for this, MSbklawyer.

Even after the BAP in the 9th Circuit told them to stop in 2010 (Mwangi v. Wells Fargo Bank, N.A) - they continue to do it. The jist of this case was "Wells Fargo’s national procedure of running a computerized comparison of all newly filed chapter 7 bankruptcy cases against Wells Fargo’s list of account holders. If one of Wells Fargo’s account holders had also filed a chapter 7, then Wells Fargo would immediately “freeze” the account so that the debtor would not have access to his or her money. Wells Fargo would then send a letter to the chapter 7 trustee seeking instructions for disbursement of the money." (referencing a post on the BK law network - who we can not post links to)

Down your way Wachovia did this, too, after Wells Fargo bought them out a little ways back.

No disrespect meant to you, kind sir. (even if you are a Rebel - War Damn Eagle!)

[tobee43]

No disrespect meant to you, kind sir. (even if you are a Rebel - War Damn Eagle!)

you need to come for a visit when the coast is clear...you are too funny!!!!!!!!!!!!

[luckstyl]

I was really worried about this, but it's extremely unlikely that your WF accounts will be frozen unles syou owe them money or unless it's a large balance. I had trouble opening a new checking account anyway because my credit was shot(obviously), so I didn't have a choice really. I'm glad it worked out the way it did, I've got nothing but good things to say about my experiences with Wells Fargo.

[tobee43]

I was really worried about this, but it's extremely unlikely that your WF accounts will be frozen unles syou owe them money or unless it's a large balance. I had trouble opening a new checking account anyway because my credit was shot(obviously), so I didn't have a choice really. I'm glad it worked out the way it did, I've got nothing but good things to say about my experiences with Wells Fargo.

you must may be ONE in a million! but glad to hear your experience was good.