Chapter 7 bankruptcy is never an easy thing to consider. You wonder what’s going to happen to your finances, your family, your job, and your bank accounts. In today’s blog from Groce & DeArmon, P.C., we discuss whether or not you can still have a bank account during Chapter 7 bankruptcy.
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Yes, You Can Keep Your Bank Accounts
Your bank won’t close your accounts just because you file for Chapter 7 bankruptcy. You’ll be able to keep those accounts open, so long as you don’t accrue negative balances for too long of a time. If your account has a negative balance due to fees or overdrawn checks, your bank may choose to close the account.
However, you might not be able to keep the money in your bank account after you file for Chapter 7 bankruptcy. Some states may protect some of your bank account’s assets as an exemption from bankruptcy. But Missouri isn’t one of those states.
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What Happens to Your Bank Account When You File for Chapter 7 Bankruptcy?
Some banks may choose to freeze your account as soon as they receive the bankruptcy notice. If you put money into that account as part of your income from a job, your bankruptcy attorney will notify the bankruptcy trustee overseeing your case. The trustee will then notify the bank to unfreeze the account so you can use the money to pay your basic bills.
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Secured Loan Through a Savings Account
You may have taken out a loan that’s secured through a savings account at your bank. That asset will likely be frozen to pay for your debt during Chapter 7 bankruptcy proceedings. The attorneys at Groce & DeArmon, P.C., can examine your situation to determine if this is the case.
How Can You Protect Your Cash Assets in a Bank Account?
Keep your bank account balance low before, during, and after the bankruptcy. As long as you keep accurate records of your expenses, it shouldn’t trigger a red flag with the trustee. You can still use your bank account for managing your basic expenses, such as food, rent, utilities, gas, etc. We’ll outline that in an expense versus income sheet when we advise you on a Chapter 7 bankruptcy case.
Stopping automatic payments coming out of your account is a good idea. That way, you have better control over your financial situation during a bankruptcy.
Bankruptcy Attorneys at Groce & DeArmon, P.C.
Filing for Chapter 7 bankruptcy protection isn’t just stressful. It can be confusing if you’re not familiar with this type of filing. Our attorneys can help you through this difficult decision. Contact Groce & DeArmon, P.C. online or call toll-free 1-800-640-3706 in Missouri or (417) 862-3706 to schedule a free consultation.