What Happens to Your Checking Account When You File for Bankruptcy?

All this aspirational claptrap about how much money you need to be middle class is downright depressing when, with every passing pay period, you fall farther and farther behind on your debts. Even if you discharge your debts in bankruptcy, you will probably never be middle class, but gratitude doesn’t cost a penny, so take comfort in the fact that, as long as you have a checking account, you are not poor, despite how little money is in your checking account. Your checking account enables you to partake of little perks like direct deposit and automatic payments, which you never think about unless you do not have them, in which case you must face all kinds of hassles. 

If you are considering filing for bankruptcy, you should undertake a thorough assessment of how your financial affairs will be after your bankruptcy case wraps up, including what will happen to your checking accounts. To help make your bankruptcy case cause as little disruption to your life as possible, contact an Oakland Chapter 7 bankruptcy lawyer.

Can You Keep Your Checking Account After a Bankruptcy Filing?

During a Chapter 7 bankruptcy case, the court has the right to take control of some or all of your property, including bank accounts. This means that it has the right to liquidate your checking accounts and use their money to settle your debts. As you prepare to file for bankruptcy, you and your lawyer should discuss what will happen to your checking accounts. Can you declare at least one account exempt from liquidation?  If so, you should ensure that all of your automatic bill payments come out of the checking account, which you will get to keep even after the bankruptcy case finishes. This way, you can avoid interruptions to your bill payments and the late fees that go with them.

If the Bankruptcy Court Does Not Get You, ChexSystems Will

What if your financial situation is so bad that the bank has already closed your checking account because of a negative balance? How easy or hard is it to open a new checking account? The reporting system for your bank-related history is called ChexSystems, and it is independent of the credit reporting bureaus that determine your credit score. A bankruptcy filing affects your creditworthiness, but it does not affect your bank-worthiness.

Despite this, if, in addition to a prior bankruptcy filing, you have a troubled history with checking accounts, banks might not be eager to let you open a new account. For example, you might run into trouble if you have had a check returned due to insufficient funds or if you owe money on a bank account that has already closed. If your ChexSystems score does not enable you to open a conventional checking account, you might be able to open a second chance account, which comes with more restrictions and charges higher fees.

Contact the Law Office of Melanie Tavare About Keeping Your Checking Account After Bankruptcy

A debt relief lawyer can help you get maximum debt relief and minimal disruption from your bankruptcy case. Contact the Law Office of Melanie Tavare in Oakland, California, or call (510)255-4646 for a case evaluation.