Banks and Credit Unions Can Keep Your Money When Bankruptcy is Filed
By Susanne Robicsek, North Carolina Bankruptcy Attorney on Sep 23, 2009 in Chapter 13 Bankruptcy, Chapter 7 Bankruptcy, General Bankruptcy Information
If there is money in a credit union or bank account when a bankruptcy case is filed, the lenders may keep the money in the borrowers banking account to apply against debts owed to them. Credit unions often give their members loans or credit cards, and because the debt is owed to the “bank” that is owed the money, they are allowed to offset (keep) or freeze the funds in their banking accounts.
Credit cards that are associated with a bank are not as clear cut since the credit cards are often sold, or moved from bank to bank. To be safe, I advise clients to put their funds in a bank that there is no chance they owe, to lessen the chance of any unexpected surprises.
Be aware that some institutions will freeze an account even if they aren’t owed money, but at some point they will be required to release the funds if they belong to the debtor.
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