What You Can Do to Open a Bank Account Following Bankruptcy

A whole book can be written about this company and the devastating effects on a person’s ability to open a basic checking or savings account. However, there is hope.

You can shop around with different banks, and ask up front if they will consider you for an account if you have cleared up your bad check history. There certainly is more flexibility when dealing with local bank managers, but they will look at the CHEX Systems report (think credit report) to review why previous accounts were closed for “cause.”

What is “for cause?” Banks and credit union have separate guidelines on what legitimate reasons to close an account. Here are some examples:

1. Lying or providing false information when opening or maintaining a checking or savings account. In the current banking climate banks and credit unions are extra careful about account holders history and some banks will close accounts after opening them. Now banks are taking cues from credit card companies and “trolling” or “sweeping” its account members’ activity with other banks by periodically reviewing CHEX Systems reports.

1. The bank or credit union was unable to collect an overdraft, automatic payment or check that they honored when you had not money in your account, or when you have multiple overdrafts that are not covered immediately. I’ve had clients report that their long held accounts were closed within weeks of this happening. In one case, my client had moved and was unaware that he had an overdraft – the account was closed by an automatic system and no amount of pleading with bank manager could reverse the decision. The bank in question was a large multi-national bank and nobody appeared to have the authority to override its own computers. Even if you later pay the bank, the incident may still remain on your CHEX System report for 5 years.

1. Fraud or abuse. Usually this entails one of two things: (1) the customer is trying to create “float” with check writing with insufficient funds or ATM deposits; (2) Identity Theft. If you have been a victim of identity theft, CHEX Systems offers a dispute process to seek removal from their system.

1. I have also seen accounts closed for “suspicious” activity. For example large transfers of money from one account to another or transfers from accounts that are later closed because of suspicious activity. I had one client have his account closed because he received two large transfers from banks from overseas. He had been receiving the same transfers n the course of his business for years. he bank cited the Patriot Act, but never fully explained what he did wrong. Again you often dealing with nameless faceless individuals in some cubicle or office making decisions that they don’t have to explain. Often times these are non-branch decisions with no appeal process.

Each incident or “for cause” report will remain on your CHEX System report for 5 years from the date of the incident was reported. Similar to your credit reports you are entitled to review your CHEX System report free of charge each year. Also similar to credit reports, you can challenge any inaccurate information.

If your account is initially turned down by a banking representative, ask to have your case personally reviewed by a bank manager, these decision initial snap decisions can and are regularly overturned, but you have to be prepared to answer their questions and explain your particular circumstances. You must present yourself in the best possible light and be prepared to explain why you would be a good customer. Remember banks want your deposit business and there is never any hard and fast rules regarding opening new accounts, so you may have to work at it. Your goal is to get an account and treat it the way you would go about re-building your credit. Forget about the old joke: “I thought I had money in my account because I still had checks in my checkbook.”

Disclaimer

Fresno-Bankruptcy-Lawfirm.com is owned by the Law Offices of Jeffery D. Rowe. We are a debt relief agency. We help people file for bankruptcy relief under the Federal  Bankruptcy Code (Title 11 of the United States Code). If you would like to discuss your situation in further detail, please call our offices at: (559) 228-1500 to schedule a consultation.

Tags: banks, chex systems, credit report, credit union

This entry was posted on Tuesday, August 18th, 2009 at 9:08 am and is filed under Life After Bankruptcy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.