Bankruptcy Filing Hazardous to Your Money in a Wells Fargo or Wachovia Account

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 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. 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.

Thanks to Robert Weed in Virginia for this hot tip!

Looking for more information about bankruptcy? Get the answers to the most frequently asked questions by downloading my free book, Top Questions People Ask About Filing Bankruptcy in New Jersey. It will give you the answers you need all in one place. Then call me at 888-857-8418 or contact me through this site for an appointment for a free consultation to discuss your case.