Can My Bank Account Be Closed if I File Bankruptcy?

return to bankruptcy faq

You can keep your bank account even though you file Bankruptcy.

But your bank account may be affected by your filing, and you would be well advised to consult a bankruptcy attorney before filing.

If you file a bankruptcy, an ordinary bank account will become part of the bankruptcy estate.  You may exempt any funds permitted under the Bankruptcy Code. You may be able to exempt all, part or none of the funds in your account depending on the types of property you own, the valuation of the property and your preferences. If the total value of ALL your assets is less than $12,725 you will be able to keep ALL of your property. You may be able to keep property worth a substantial amount more. For a more complete discussion of your exemptions, See Will I Lose Any Property If I File Bankruptcy?

Bank accounts may also be a problem in another way. If you owe money on a loan from your bank, have a credit card from the bank, or have an overdraft on one of several accounts the bank may set off the amount owed to it. This means the bank can keep the money in an account of yours to repay money you owe the bank on another account or obligation.

Another problem may arise if you have an overdraft. Such an obligation may or may not be discharged by the Bankruptcy Court. If the overdraft were found to be fraudulent or constitute a willful and malicious tort (in a Chapter 7 case) it could not be discharged.  Willful and malicious torts may be discharged in a Chapter 13 case. And the automatic stay and the Bankruptcy Court will NOT stop a possible criminal action for issuing a dishonored check. (Minnesota Statutes, §609.535). However, not every overdraft, particularly if unintentional, violates this statute. And County Attorneys (or City Attorneys) do not charge all violations. Whether criminal or not, a bank may refuse to allow you to open or maintain an account because of an unpaid overdraft. Consult your attorney if, after filing a bankruptcy, your bank conditions opening or maintaining an account on whether an overdraft has been repaid.

return to bankruptcy faq

Have further questions that are not covered in our Bankruptcy FAQ pages, we understand.  Contact us today for help and assistance with your financial issues.  A simple phone call, (651) 639-0313 or email today can relieve your stress and change your life.  Contact us today!

Disclaimers, Warranties, & Copyright