This is an often overlooked aspect of bankruptcy planning because the process of bankruptcy and financial disaster focus solely upon the effects of debt not the aftermath of rebuilding your financial life. Having a checking or saving account is critical to getting and maintaining a fresh start after Chapter 7 bankruptcy.
You need to be able to deposit you paycheck or earnings easily, pay bills with checks, online or with automatic deductions and have a savings account. Without regular access to financial institutions like banks and credit unions your goals of security and savings become extremely challenging.
In the event that you can’t open a checking or savings account or have lost access as a result of misuse (I will discuss CHEX Systems in another post), I will over the next several post discuss some alternative strategies to help with your post bankruptcy financial life.
Before You File Bankruptcy
During the initial consultation with my bankruptcy clients, I almost always advise clients to open new checking and/or savings accounts with new banks or credit unions if they have had trouble with their bank or credit union as a result of bounced checks or overdrafts or if they have credit card or mortgage accounts with the same institution.
Just open another bank account with a local bank or credit union where you do not owe money either in unpaid late fees, bounced checks, credit cards, mortgages, or personal loans.
The threat is that after you file bankruptcy, the bank or credit union will close or freeze your account as result of the money you may owe them as a result of bounced checks, mortgages or credit cards.
Usually the money is eventually released, but not before it creates weeks of financial havoc of not being able to get at your pay check. I have witnessed instances where clients did not follow my advice and their automatic deposited pay checks continued to be deposited into a frozen account.
This is also important: Don’t close your bank account, just open a new one at a new bank and re-direct your direct deposit to the new account until the bankruptcy is over. It’s possible, if not probable that your old account will survive the bankruptcy – than after your discharge it’s ok to use the account again.
Following this strategy ensures that you have access to at least one bank account, and possibly your old account, post bankruptcy.
After Opening a New Account Immediately after opening a new bank change your direct deposit routing instructions (If you have direct deposit).. Contact your human resources or payroll department to find out the procedures, but this should be done immediately once you have made your decision to file bankruptcy.
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: bank, chapter 7, checking account, chex systems, credit union, financial, paycheck