What Should I Do About My Checking and Savings Accounts?

If you are considering filing bankruptcy, you need to think about your savings and checking accounts.

There are a couple of important reasons to change credit unions or banks before you file bankruptcy:

First of all, many banks will freeze accounts that have your name on them as soon as you file bankruptcy. The banks say they are protecting assets for the bankruptcy court, but the bankruptcy court did not ask the banks to do this. If you are considering bankruptcy, avoid banking with Wells Fargo, Wachovia, Bank of America, Union Bank and any financial institution which has made it a policy to freeze accounts.

If your account is not at bank listed or a bank that holds that policy, you will want to stop all transactions that are automatic withdrawals. If you set up automatic drafts to pay medical or credit card bills, you want to stop these payments. Telling your bank to stop the draft is no guarantee that withdrawals will stop. It is easier just to close the account. Why end up fighting to get money back from a creditor? In most cases, just close the old account and open a new one.  But if you owe the bank money, move your account to a new bank.  You don’t want to keep your money at a bank where you owe money.

Avoid a set off. Banks can reach into your account and take money out to pay some other debt you may owe like credit cards, overdrafts, and loans.  It is not uncommon for a bank to withdraw money from your checking account and apply it as a set off against other debts you owe them.

There are many more things specific to your situation that may also come into play regarding your checking and savings accounts. It’s important to discuss these items with me as a part of your preparations for filing bankruptcy.