If you are considering filing Tennessee or Georgia bankruptcy, you probably have many questions. Rumors and myths circulate freely, and it can be challenging to determine the facts. We wanted to address one common question that potential filers ask before making their final decision to file: what happens to the checking and savings accounts?
Will I Lose My Checking or Savings Account if I File Bankruptcy?
When you file Chapter 7 bankruptcy, you can usually keep your actual checking account and savings account. Most banks do not typically close this type of account in response to a bankruptcy filing, but some do. Whether or not you get to “keep” the money in the account is a different issue. However, for many credit unions, if you have an unpaid credit card or loan with the credit union servicing your checking or savings accounts, the credit union may be able to seize your accounts when you file bankruptcy, and apply the balance against your loan. Sometimes they will seize your account balances and close your account. Timing is often a crucial element as to when to file your case. Discuss this possibility with your bankruptcy attorney in your initial consultation.
Do I Get to Keep My Checking and Savings Account Balances When I File Bankruptcy?
You can keep a bank account balance or even cash when you file Chapter 7 bankruptcy as long as it qualifies as an exempt asset under bankruptcy exemption laws, and if the balance in the account is not security for the loan at that institution. Bankruptcy exemptions are laws created to protect property in a bankruptcy. The bankruptcy court cannot sell any exempt property to pay creditors. If the account balance on your checking or savings account falls under the state exemption, it qualifies as an exempt asset. Discuss the state bankruptcy exemptions with your bankruptcy attorney to minimize the consequences of filing. For instance, under Tennessee state bankruptcy law, the wildcard exemption allows bankruptcy filers to exempt up to $10,000 of any personal property, including bank balances.
Bankruptcy Exemption Laws Mean You Don’t Have to Give Up Everything:
Bankruptcy filers do not have to give up everything they own when they file bankruptcy. In most cases, bankruptcy exemptions cover, little, if any of a petitioner’s account balance, but discuss your situation in detail with an experienced bankruptcy attorney. There are often exemptions for portions of the balance if they came from exempt sources like recent wages/earnings, money received from public benefits, etc.
If you have a significant checking or savings account balance and think some of it may be exempt under state bankruptcy exemptions, call Kenneth C. Rannick P.C., Tennessee, and Georgia bankruptcy attorney. We help good people through bad times.