Bankruptcy and Your Bank Account
When determining how to handle your bank account before bankruptcy, there are few things you need to consider:
- Do you owe money at the same bank where you have a checking or savings account? Oftentimes, debtors considering bankruptcy bank and hold their mortgage at the same place. Or, they have automatic payments coming out of their bank accounts for a credit card or car payment. If that's the case and you are no longer able to make payments, you may want to consider opening another bank account someplace else. Your mortgage company may have the right to offset your bank account if you become delinquent and even if you cancel your automatic monthly payments for your car note they may send it through anyway. In that case you could end up short of funds or worse, with an overdraft. It's best to keep some cash on hand or open a separate bank account if you feel that you are at risk for a bank account offset.
- Do you suspect that a creditor might seize your bank account before you file bankruptcy? Has a creditor already filed a lawsuit against you and won a judgment? If so, you are in imminent danger of a bank offset taking place before you file bankruptcy. Remember, judgments can give creditors extra collection power to garnish you wages or seize certain assets such as a bank account. In this case you may also want to consider opening another bank account and keeping some cash on hand so that you know you have money for the necessities.
- Are you able to get another bank account where you don't owe any debt payments? When we're experiencing hard times, oftentimes our credit suffers, affecting our ability to open a bank account. Before filing for bankruptcy, check with some small community banks to see if they are willing to let you open a checking account despite your credit blemishes.
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