Most banks in San Diego County will let you keep your bank accounts open and will let you continue to bank as usual with your bank accounts after bankruptcy. A few banks, and credit unions, will close your account when you file bankruptcy San Diego. Others may place a temporary freeze on your account while they determine their setoff rights. An experienced attorney can let you know which banks may close your accounts, and which banks will let you keep your accounts open.
Keep Your Bank Account In Bankruptcy San Diego
A big concern of many people in San Diego County who are considering bankruptcy is, "can banks take your money after you file bankruptcy?" Generally, the answer is no. However, your bank may have setoff rights. When you file bankruptcy San Diego, banks that you owe money to can take the money in your account as an offset (or set off) against a debt that you owe to the bank. Set off rights refer to the bank’s ability, under certain circumstances, to take the money in your bank account at the time that you file bankruptcy and use the money to “offset” (or pay off) your debt to the bank.
Set Off Against Credit Card Debt
For example, if you have a credit card through the same financial institution where you maintain accounts, the bank may freeze your bank account after bankruptcy while it determines if it has setoff rights such that it can keep the money in your bank account to offset your debt owed to the bank.
If you are concerned that your bank may have set off rights, then discuss with your lawyer the option of opening up an account at a different financial institution and starting to use that new account. That way, you won't risk losing any money based on a set off.
Also, if you receive direct deposit into the account you are concerned about, then as part of the planning process your bankruptcy attorney will advise you to discontinue direct deposit and receive paper paychecks until you file your case, or adjust your direct deposit so that it is deposited into your new account at a new bank.
Once your case is filed with the Court, you can resume putting money in whatever bank accounts you choose, and your creditors that you had before bankruptcy cannot touch your bank accounts.
How Much Money Can I Keep?
When you file bankruptcy, bank accounts, or more precisely your money in your bank account, are treated just like any other asset. If the money in your bank accounts is within your allowable exemptions (exemptions refer to property you keep when you file bankruptcy), then you will get to keep the money in your accounts. If and to the extent your account funds exceed your allowable exemptions, then you will have to give up those funds.
Open a Bank Account After Bankruptcy
Many banks in the San Diego area will allow you to open a bank account after bankruptcy. An experienced lawyer can give you some names of banks that will open up a bank account for you after your case is filed. You will find that the days when most of the financial institutions would refuse to open up bank accounts for you, or only offer you some type of a restricted bank account, are over.
Some banks in San Diego, including national banks, will even let you open up a bank account while you are in a pending Chapter 7 or Chapter 13 bankruptcy. If you need to know the names of banks that currently open up bank accounts during bankruptcy, call Bankruptcy Legal Center and talk to an attorney.