Some banks like Wells Fargo have a policy to place an administrative freeze on any account of a newly-filed Chapter 7 debtor with a balance exceeding $5,000. Other institutions like Union Bank are even more strict on this issue. One colleague told me about a case where Union Bank had frozen a debtor’s bank account that contained only $16.
But whip up your horses, and get it out of Wells Fargo. Here’s the issue. Exemptions protect assets in bankruptcy. While a Chapter 7 bankruptcy filing is a moment in time, capturing the assets of the filer and the existing claims of her creditors on the day a bankruptcy is filed, life is more like a flowing stream.
Although Wells Fargo appears to be the only bank freezing chapter 7 debtor’s bank accounts, other banks may follow suit. Accordingly, it is incumbent upon chapter 7 debtor’s attorneys to explain to their clients the potential risks that their accounts may be frozen for a period of time following the filing of their bankruptcy.
Avoiding an Administrative Freeze on Your Bank Account.. The husband also has a debt to Wells Fargo from before their marriage.. in a Chapter 7 "straight bankruptcy" case all of your assets technically belong to your "bankruptcy estate" until the time expires for the trustee and creditors.
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I just found out that Wachovia froze my business checking account, because I filed chapter 11 bankruptcy. I’ve been reading a lot of articles and none of them mention wachovia freezing accounts when you file chapter 11. All the articles I read so far are stating that Wachovia will freeze your account when you file chapter 7.
From my research only Wells Fargo and union bank freeze the accounts of Chapter 7 debtors, purportedly because upon filing the assets are property of the Estate. Are you aware of any other banks that place such administrative freezes on Chapter 7 debtors’ accounts? For those of you that do not place such freezes, do the chapter 7 trustees object to you NOT placing the freeze?
I started this thread a few months back, and thought I’d report that I received my discharge today. My Chapter 7 Bankruptcy was final on March 9, 2010. The only snags were Wells Fargo freezing my checking account, then freezing my Mother-in-Law’s account (that my wife signs on to help her pay bills).