Banks generally cannot take your money just because you have filed a Chapter 7 or Chapter 13 Bankruptcy. When your petition is filed an automatic stay goes into effect an all activity to collect on any debts you have must stop. This includes phone calls, letters, foreclosures and most asset seizures and garnishments. Also included within the automatic stay is any action a bank may take to collect money which they believe they are owed from you. Occasionally a bank may have the legal right to “set-off” any debts you have with the bank with any deposits you may have on account if there is a set-off agreement related to your accounts. Before acting or exercising their rights on the set-off, the bank must first get permission from the court by way of motion, for relief from the automatic stay.
Recently a small minority of banks have taken to freezing the deposits of some debtors upon their filing of a bankruptcy petition. The freezing of the account does not involve any taking of money, and are often times only temporary in nature, but can be extremely stressful for both a debtor and attorney if they are not property prepared. The freeze will last until the trustee assigned to the case authorizes the bank to release the funds, if the circumstances permit it. Although banks generally cannot take money from you, there are complicated legal issues related to set-off practices, as well as a familiarity with the bankruptcy process and bank procedures necessary to help keep your accounts accessible during your filing. Speaking with an experienced Delaware bankruptcy attorney is the safest way to assure that during the bankruptcy process, your funds are not only protected from your creditors to the maximum amount permitted by law, but that they are available when you need them for your daily expenses.