For years banking institutions have worked hard at convincing debtors that they should bank and borrow money at the same financial institution. But what if things go bad and you can't pay your bills without jeopardizing the roof over your head?
Filing for bankruptcy will stop judgments and other collections efforts of creditors; but what if you bank with one of those creditors? Well, if you file for Chapter 7 or Chapter 13 bankruptcy and have a bank account with one of your creditors, a few things may happen.
- The bank may close your checking or savings account after you file for bankruptcy.
- Sometimes the bank will "illegally" seize your money in the bank account after a bankruptcy filing.
- The bank may freeze the money in the bank account after the bankruptcy filing.
The best course of action a debtor can take before filing for bankruptcy is to close the checking or savings accounts where they hold debt and reopen the account with a bank where they have no debt.