3 Reasons To Move Your Checking Account Before Filing Bankruptcy

Bank-sign-150x150Banks do unexpected things when one of their customers files bankruptcy. Nothing they do is to help you. Even if you think your bank is the greatest, there may be reasons to change banks before you file your bankruptcy case.

  1. They May Take the Money in Your Account.

Your bank owes you the money that is in your account. But if you owe them money on a personal loan or a car loan, they have the right to take the money in your account to pay themselves what you owe them.  This is called a set off, or an offset.  While your bank can do this at any time, based upon the loan documents, the notice of bankruptcy is what will set this off.  All of a sudden, you can’t get to the money in your account. Your money is the bank’s money.

What to do?

Close the account and open an account at another bank, or withdraw money to bring the  balance down low to an amount you are willing to lose.  Money you earn after you file bankruptcy is safe from off set against a debt you owed that bank before the bankruptcy.

  1. They May Freeze Your Bank Account.

Some banks, like Wells Fargo, Bank of America, and Chase, will freeze your bank account when they get a bankruptcy notice, even if you do not owe them money.  The bank claims they are helping the bankruptcy trustee.  Even if the trustee never asked for help.  The account can be unfrozen, but it takes time, time you are without your money.

What to do?

Open an account at another bank to use temporarily and reduce the amount on deposit at Wells Fargo or the other banks until they remove the freeze.

  1. They May Block the Internet Access to Your Account.

Your bank will block access to electronic records and to cut off your electronic banking once they get notice of bankruptcy. This is annoying, but you can still get your money and transact business in person.

What to do?

Make paper copies of account numbers, payment addresses and monthly payments before you file your case so you can mail payments, if needed.