It’s a somewhat rare occurrence, but at times it does happen. What would you do if the bank froze your account after you filed for bankruptcy? Today we’re answering all of your questions about this undesirable possibility.

Why would the bank freeze my account?

There are a few reasons a bank might freeze your account after you file for bankruptcy, and you may have to do some digging to figure out which is the culprit in your situation. The bank might be protecting its right to use your money in your account to go towards a debt you owe to the bank. It is also possible that the bank is trying to protect your money from being used now that it is under the jurisdiction of bankruptcy court.

When will they unfreeze my account?

Typically, if they are protecting an asset of the bankruptcy estate, they will wait to find out if it is exempt or will be used to pay your debts. They would wait until the asset is released back to you to unfreeze your account.

If the account was frozen because you have a debt to the bank, the bank will need to wait for court approval to apply your money to your debt. There may be restrictions that keep them from doing so, especially if you have not yet defaulted on your obligation to them.

What kind of account might the bank freeze?

Any. This could happen to a regular checking account, a savings account, or any other bank account where you have liquid assets.

What can I do to prevent this from happening?

If you owe money to a bank, it is best to keep your liquid assets in accounts at a different bank rather than that one. Even if you don’t owe the bank money, it may be wise to withdraw money before filing for bankruptcy. If your money is in cash in your hands, you are less likely to lose access to it. 

Who can help me if I need to file for bankruptcy?

If you are facing financial issues and believe bankruptcy may be the right path for you to take, you need to consult an experienced bankruptcy attorney. The Hedtke Law Group is here to help. We offer new clients a free consultation, so don’t hesitate! Give us a call at (909) 579-2233 to learn more about how we can assist you.