Beware of BK bank account freezes
Date: Thu, 05/14/2009 - 12:02
This was a recent post in the news group alt.bankruptcy. The OP in the thread had $14K in bank accounts that he thought would be protected as part of California's $21K wildcard exemption when filing a Ch. 7 BK. To his horror, the bank froze the accounts, even though he didn't have a debt with that bank. Apparently this is becoming a common practice. Moral of story: don't keep a lot of money in the bank if filing BK.
Post folllows (unfortunately had to remove helpful links):
> If WF acknowledges that you do not have debt of any kind to that bank,
> then an obviously relevant and indeed hardly minor detail you forget
> to mention is what basis in law or in fact WF claims entitles it to
> freeze your account *regardless* whether you did or did not seek
> bankruptcy protection.
This is becoming a common practice with most major banks in the United
States in just the past year. It does not matter if the filer is a
debtor to the bank through a defaulting mortgage or other loans or
credit card defaults. It has already been contested in several cases
with some success but it continues unabated.
Most bankruptcy attorneys are aware of this new practice and we urge
our clients to withdraw as much money as they feel comfortable as far
in advance of filing as possible leaving only enough to maintain their
account status active. These links should answer your questions.
As for your other question or comment:
> In other words, you have more than two weeks to find an attorney who
> is genuinely knowledgeable about and experienced in dealing with these
> sorts of issues on behalf of an individual bankrupt instead of
> wallowing in avowed befuddlement as you indicate has been and remains
> so for your present lawyer.
You may be unaware once a chapter 7 has been filed through a specific
attorney, the client cannot choose another or additional attorney to
represent them through the 341 and discharge except under extreme
circumstances authorized by the court. Although it sounds like Wright
son may have a legitimate complaint that the case trustee would at
least consider, I honestly don't think at this point it would serve
the client's best interest unless there are gross errors in his
filing.
Unless there is other assets that bring the amount above (I assume
you're filing in) California's wild card provision, you should get
your funds released back to your account during the 341 hearing by the
trustee.
Post folllows (unfortunately had to remove helpful links):
> If WF acknowledges that you do not have debt of any kind to that bank,
> then an obviously relevant and indeed hardly minor detail you forget
> to mention is what basis in law or in fact WF claims entitles it to
> freeze your account *regardless* whether you did or did not seek
> bankruptcy protection.
This is becoming a common practice with most major banks in the United
States in just the past year. It does not matter if the filer is a
debtor to the bank through a defaulting mortgage or other loans or
credit card defaults. It has already been contested in several cases
with some success but it continues unabated.
Most bankruptcy attorneys are aware of this new practice and we urge
our clients to withdraw as much money as they feel comfortable as far
in advance of filing as possible leaving only enough to maintain their
account status active. These links should answer your questions.
As for your other question or comment:
> In other words, you have more than two weeks to find an attorney who
> is genuinely knowledgeable about and experienced in dealing with these
> sorts of issues on behalf of an individual bankrupt instead of
> wallowing in avowed befuddlement as you indicate has been and remains
> so for your present lawyer.
You may be unaware once a chapter 7 has been filed through a specific
attorney, the client cannot choose another or additional attorney to
represent them through the 341 and discharge except under extreme
circumstances authorized by the court. Although it sounds like Wright
son may have a legitimate complaint that the case trustee would at
least consider, I honestly don't think at this point it would serve
the client's best interest unless there are gross errors in his
filing.
Unless there is other assets that bring the amount above (I assume
you're filing in) California's wild card provision, you should get
your funds released back to your account during the 341 hearing by the
trustee.
Do you know if this is only happening with chapter 7's or if it
Do you know if this is only happening with chapter 7's or if it happens with chapter 13's as well?
