When someone files bankruptcy, they must list all of their assets, including money in their bank accounts. Exemptions are also available to protect those assets from the trustee, who might otherwise use the value of said asset to pay debts.
The trustee, however, has a right to object to those exemptions by a certain deadline. A problem has arisen, however, with certain banks who want to "help out" the trustees when one of their depositors files for bankruptcy, even when said depositor does not owe that bank any money.
Wells Fargo "Helps" the Trustee
Wells Fargo Bank has for several years taken the position that if a depositor files for bankruptcy, then any account they have with the bank is an asset of the estate and must be "preserved for the trustee" (i.e. frozen). You say that those moneys in your checking account were fully exempted? Well sure, but the trustee has until xx date to object, so we will just keep the account frozen until then to see what happens!
When Wells Fargo acquired Wachovia Bank, they started doing it too. Don't believe it? Check out this letter from Wachovia dated this month to a Georgia bankruptcy attorney.
Quite frankly, the trustee doesn't need the bank's help. He or she has other ways to enforce his or her position and force a disgorgement of funds from the debtors should the need arise.
So What Do I Do?
The bottom line is, if you are considering filing bankruptcy and have money in either of these institutions, move your money before you file! You may end up with frozen funds and a mortgage/car/utility payment that bounced.
If you live in South Jersey and are considering filing bankruptcy, call my office at 856-432-4113 or contact me through this site for a free consultation in my Woodbury office to discuss your case.
If you are looking for more information about bankruptcy, then download my free book,Top Questions People Ask About Filing Bankruptcy in New Jersey.
Thanks to Robert Weed in Virginia for this hot tip!