Protect yourself from your bank during bankruptcy
Image source: Flickr Creative Commons User Ken Teegardin
North Carolina bankruptcy exemptions allow you to protect a certain amount of assets and typically two months worth of wages. These exemptions are usually enough to protect most consumers but even if the state exemptions shield your money, that doesn't necessarily mean that it's safe. Your bank and other creditors may be able to take your money away just as you're about to get the financial relief you so desperately need. Here are four reasons to change your bank to shield your cash during bankruptcy:
#1 If you owe money to your bank or credit union
If you have a loan or credit cards that are issued by your bank or credit union and are planning on having these discharged in bankruptcy, you should definitely move your money before you file. The banks have what's called a “right to set-off” that allows them to apply any money you have in your account against the debt you owe them. This isn't part of the bankruptcy code, but it's in the terms and conditions of the contract you signed with the financial institution when you got the credit.
#2 If your bank has a harsh anti-bankruptcy policy
Some banks take harsh measures against customers that file bankruptcy even if they're not owed any money by the filer. Both Wells Fargo and Union Bank take the extraordinary measure of filing an “administrative freeze” on your account as soon as they are notified that you've filed bankruptcy. They then notify your bankruptcy Trustee that they've frozen your funds, tell them how much you have in the account, etc. Some appellate courts have ruled this practice violates the automatic stay while others have allowed it. Beware of banks that do this.
#3 If you have garnishments or judgments in the works
If you're being sued by a creditor or being garnished, opening a new bank account and moving your direct deposit can put an end to this. Better still if you move to a new bank prior to the garnishment or judgment being cemented. Bankruptcy can help shut this down and even get some of your money back, but it's better to avoid it altogether until your filing enacts the automatic stay. Most creditors will track where prior payments came from to know what bank to pursue, so moving banks is a big help.
#4 If you have a joint account with a non-filer
If you share an account with your spouse and they're not co-filing bankruptcy with you, closing your joint account and opening individual accounts until you have your bankruptcy discharge is wise. This will protect your funds and your spouse's. And if you share an account with a non-spouse, you should follow the same rule of thumb. This will allow you to protect your funds and your partner's. Commingling funds can pose all sorts of issues during the bankruptcy process.
If you're deep in debt and looking for solutions, contact the law offices of John T Orcutt to find out how a North Carolina bankruptcy can give you the financial relief you need.