The Impact of a Bankruptcy Filing on Your Bank Account
September 9, 2021 By: Carrie Weir
Will the Bankruptcy Trustee Take the Money in Your Bank Accounts to Satisfy Creditors?
You’ve been good at saving money and have a little stash in the bank. Then the unexpected happens…you run up extensive medical bills because of an injury or illness, or you lose your job, and bankruptcy is inevitable. You understand the value of that cushion in your bank account and you’d like to keep some of it. Can you? Will the bankruptcy trustee clean out your bank accounts to satisfy your creditors?
How Bankruptcy Will Affect Your Bank Accounts
Your bank accounts will not be closed as a part of the bankruptcy process. There’s nothing in the bankruptcy laws that requires or even allows that. Furthermore, your bank typically won’t close your bank account simply because you’ve filed for bankruptcy protection, provided your account is in good standing. If you have a negative balance and have bounced a few checks, though, that could happen.
With respect to the funds in your account, there is, unfortunately, little protection in the bankruptcy laws. There are, however, some things you can do:
- Check with the laws of your state to see if there’s a bankruptcy exemption for cash on hand—Texas does not have one.
- Check the laws of your state to see if money received as child support or alimony is exempt from the bankruptcy trustee. In Texas, money received as spousal or child support cannot become part of the bankruptcy estate.
- In Chapter 7, some portion of your wages can be exempt if they are in your bank account (and not spent on acquisitions).
- Some states, including Texas, offer a “wildcard” exemption, which can be applied to any personal property. The Texas wildcard exemption allows you to claim up to $1,125 in addition to up to $11,500 in an unused homestead (real property) exemption.
Contact an Experienced Rockwall, Texas, Bankruptcy Attorney
At the Law Offices of Carrie Weir, all potential clients are entitled to a free initial consultation. To arrange an appointment, contact my office online or call 972-772-3083. I handle Texas personal bankruptcy filings in Rockwall County, Collin County, Dallas County, Hunt County, and the surrounding counties.