If you’re like most people, the idea of filing for bankruptcy can be overwhelming. Not only do you have to worry about what your credit will look like when the process is over, but you may wonder what will happen to your bank account during this process. If you’re ready to file but don’t know what to expect, you’ll want to keep reading. The following blog explores what you should know about opening a bank account after bankruptcy and why working with a Memphis, TN consumer bankruptcy lawyer is crucial to guiding you through these matters.
Will the Bank Close My Accounts if I File for Bankruptcy?
In general, if you file for bankruptcy, you will likely be able to keep your existing bank accounts. However, you should note that this depends on the bank itself, how much money you owe, and the type of bankruptcy you pursue. For example, during Chapter 7, the assets in your bank account may be seized by your trustee to repay creditors, while Chapter 13 grants an automatic stay that provides protection against creditors looking to seize or freeze your accounts. You should note that a bank may reserve the right to close your account as per the terms and agreements you consented to when opening the account. If you are unsure if this could impact you, connect with an experienced attorney to discuss your options.
If you are worried about protecting your accounts during this process, you may be able to utilize exemptions to shield your accounts. Tennessee offers a wildcard exemption that allows you to protect up to $10,000 worth of personal property. If you choose, you can apply this to your bank account to protect the assets held there.
Is It Possible to Open a New Bank Account After My Case is Closed?
It’s important to understand how bankruptcy impacts your ability to open new accounts. Generally, you’ll find that because this process can drastically impact your credit score, you may have trouble finding a bank willing to open an account under your name. Banks have the right to refuse those who do not meet their credit standards. As such, if your credit score is low, you’ve had problems with other accounts like overdrafts, or the bank determines that your bankruptcy history is too much of a risk, you may be denied an account.
Some banks are more lenient about who can open an account. Often, you’ll find that you may be denied a checking account, but you may be able to open a savings account at the branch. Though this can make it difficult to make purchases as you will not have a debit card, you can use the account to build up your savings.
As you can see, navigating banks during bankruptcy can be difficult as there may be a lot of uncertainty during this period. As such, it’s in your best interest to connect with an experienced bankruptcy attorney to explore your legal options during this matter. At the Arnold Law Firm, we understand how complicated these matters can be, which is why we will do everything possible to assist you in these difficult times. Connect with us today to learn how we can fight for you.
