If you’re considering bankruptcy, there are a few things you may need to do with your bank accounts to protect yourself from creditors. Let’s take a look at a few:
Close Your Bank Account
If you have a delinquent debt account such as a credit card, mortgage or car loan with the same bank where you hold your checking or savings account, close that account before you file bankruptcy. If you keep your cash in that account, once the bankruptcy is filed, the bank will put a hold on your cash making it impossible to pay for basic expenses.
Open New Bank Account
Before filing bankruptcy, open on a checking and/or savings account at a bank where you don’t have any debt accounts. Once you file bankruptcy, the cash in this new account will remain available so that you won’t miss payments on critical items such as rent and utilities.
Stop Automatic Payments
While automatic payments are convenient, they can present a problem once you file bankruptcy. Because it takes time to notify creditors of your bankruptcy filing, they may inadvertently take money out of your account after you file bankruptcy. To avoid this problem simply cancel all automatic payments before you file bankruptcy.
Track Your Money
Don’t make any large withdrawals right before filing bankruptcy without making sure you account for where the money went. Once you file bankruptcy, the trustee will look at your accounts to see if you have taken out cash in an attempt to avoid paying creditors. If you need to withdraw cash to pay rent, utilities or buy food, make sure to keep receipts and prepare to explain your actions.