Will Bankruptcy Affect My Checking or Savings Accounts?

As with many questions that arise when considering filing a bankruptcy case, the answer to this question will depend on the specific facts of your case.  There is commonly no trouble with keeping your existing bank accounts when you file a bankruptcy case, but in some instances, you may need to plan ahead before filing.

Will My Bank Find Out About My Bankruptcy Claim?

If you don’t owe any loans or other debts to your bank, then you ought not to have any problems banking with the same institution.  In fact, it is unlikely that your bank will find out that you have filed a bankruptcy case.  The Bankruptcy Court doesn’t send notice to a person’s bank, and banks don’t typically run periodic credit checks for customers who have basic checking or savings accounts.  However, if you owe a debt to your bank, then that must be disclosed when you file a case.  The bank will be sent an official notice from the Court that you have filed.

When you owe a debt to the bank that holds your accounts and they receive notice that you have filed bankruptcy, many banks will “set-off” your account.  This means they can take whatever funds are in your accounts to apply to the debt you owe to the bank.  Since the funds were already in the bank’s possession, they are allowed to set-off as an exception to the bankruptcy automatic stay that protects your assets.  Not all banks will do this so it is important to tell your bankruptcy attorney everywhere you have an account so they can advise you how to best protect your funds.

Ask Yourself, "Will the Bank Take a Loss When I File Bankruptcy?"

Finally, if you file a Chapter 7 liquidation bankruptcy, but you declare you are going to fully repay, or “reaffirm,” your debt with your bank, then they will typically allow you to continue banking there as usual.  A good rule of thumb to use is to ask yourself “Will the bank take a loss when I file bankruptcy?”  If the bank will end up getting repaid everything they were expecting, then it is a good bet that your accounts will be fine.

Contact a Trusted Bankruptcy Lawyer for Help

However, as I mentioned earlier, this is an area of bankruptcy law that is very specific to the facts of your case and to the individual banks you’re dealing with.  At Bond & Botes, we strive to maintain good, professional relationships with banks local to each of our branches.  This enables us to better help you when it comes to planning a successful bankruptcy case.  If you’re considering filing, please contact one of our convenient offices in Alabama, Tennessee, or Mississippi.  We offer free initial consultations with our attorneys to help you plan for the future.