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You may have been out shopping for groceries this past weekend, or perhaps at your favorite local hardware store picking up tools and materials for a few maintenance projects on your home. As you perused the aisles and began filling your cart, most likely you had no sense that any trouble was brewing regarding your ability to pay-until that embarrassing moment when you reached the cashier and heard, “I’m sorry but your card has been declined.” This is always a bad moment, and one most of us have experienced due to one issue or another. As the line behind you began to build, you probably tried swiping at least a couple more times only to get the same humiliating result.

The next blow comes upon speaking with the bank and discovering they have frozen your accounts because you filed for bankruptcy. Like most, you have probably been experiencing substantial financial challenges prior to filing-and frozen accounts are one more major surprise and hassle you certainly do not need. You may be quite frustrated that you can’t get to the small amount of liquid assets you do have left after filing.

Whether you are filing for Chapter 7 or Chapter 13, some banks can-and will-freeze your accounts as soon as they find out. This is even more likely if you have taken out loans with their banks and are still carrying a balance. Thorough bankruptcy pre-planning may be able to prevent an issue like this beforehand, as well as the general practice of declining to bank where you have loans out; however, if you have just filed and did leave money in your account, it is possible that you could find it suddenly unavailable-and in some cases even removed for payment against your loan with the bank.

Wells Fargo is the bank most well-known for their policy of freezing accounts, usually after a customer files Chapter 7. This type of activity is less common for debtors filing Chapter 13 as their plan focuses on repayment-and the bank or creditor will most likely still be getting payments on their loans. If you are currently in a Chapter 13 bankruptcy though and owe your bank on a loan, they may indeed freeze your funds and then use them to ‘set off’ the amount owed on loans-usually cars or homes.

The amount that it is in the account generally doesn’t matter-and although in most cases, the bank is just placing an ‘administrative hold,’ on your funds, it may be challenging to regain access quickly. As soon as you realize one or more accounts have been frozen, contact your bankruptcy attorney. The bank may be in violation of the automatic stay that went into effect as soon as you filed (meaning all debt collectors must cease collections activity), and your attorney may also need to file a motion to have funds either released or returned as well.

Because Levitt & Slafkes, P.C. has already helped thousands of clients through the bankruptcy process, we understand exactly what you are going through. Our experienced bankruptcy attorneys can offer solutions tailored specifically to your financial circumstances. The initial consultation is offered at no cost, and we are even available to meet with you on weekends and evenings. We are here to help! Call us at 973-323-2953, or contact us online to schedule a free consultation.