Virginia Bankruptcy

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Sep 2011

Before bankruptcy: three reasons to change banks

Posted by / in Virginia Bankruptcy / 32 comments

<h2>Before bankruptcy:  three reasons to change banks</h2>

When people talk to me about filing bankruptcy, I often tell them to change banks.

Here are three reasons.

1.   If you have money in a bank you owe money to: change banks.  A bank is allowed to pay themselves for money you owe them.  If you have money in Bank of America and you have a mortgage, or equity loan or signature line with them, they can grab your money to pay themselves.

Credit Unions are especially quick.  And credit unions can also offset credit cards, too.  (Banks are not allowed to do that.)  As a precaution, get your money out of any bank you owe money to.

Virginia Bankruptcy Lawyer Robert Weed

“Before you file bankruptcy, here are three reasons to change banks.”

2.  If you have money in Wells Fargo: change banks.  Even if you don’t owe them any money, Wells Fargo will freeze your bank account when they hear about the bankruptcy.  They think bankruptcy law requires them to do this–even though no other bank thinks that way.  (Henry Sommer, former president of the National Association of Consumer Bankruptcy Attorneys, jokes that maybe they just do it to collect bounced check fees.)

Whatever the reason, close your account at  Wells Fargo.

3.  If you are in danger of garnishment: change banks.

Do you have a warrant-in-debt or other court paper?  Once a creditor has a judgment against you, they can garnish your bank account.

How do they know where you bank?  They will look at the last check you wrote them–maybe a year or more ago–and they will hit that bank.  So, make sure when they do that, you don’t have any account there any more.  (Just getting a different account number at the same bank doesn’t work. )

Where should you go?  I like to tell people the universe is full of banks.  As long as you don’t owe them any money, and it’s not Wells Fargo, and you haven’t banked there before, any bank will do.

(Some people are afraid as soon as they open a new bank account, everyone will know.  That’s not true.  This is still America.  Your private business is still, mostly, private.)

Some people’s credit is so bad they have trouble opening a new account.  If you are worried about that, try TD Bank.  They will open an account for people who can’t get one anywhere else.  (People also tell me they really like TD.)

Here’s one thing you should not do.

Don’t put your money in someone else’s bank account.  That is not allowed.  If you put your money in someone else’s name, you can lose your bankruptcy discharge.  When your bankruptcy is over, the court would tell everybody you owe money to, that it’s open season on you again.   Don’t do that.

While we’re talking about bank accounts, close your orphan accounts.  You know, those accounts that still have $5.00 in them from when you used to bank there, where you used to live.  Close them.

When we go to the bankruptcy court together, you have to turn in account statements for all your accounts.  You don’t want to be fumbling around with six accounts when you only really need one.  You also don’t want to get sent home from court to look for that last account statement on the account you never use.  Close them!  You’ll save yourself (and me and the bankruptcy court) a lot of headaches if you take my advice on that.

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Robert Weed has helped twelve thousand people file bankruptcy in Northern Virginia. Robert Weed is a frequent panelist and speaker at the meetings of the National Association of Consumer Bankruptcy Attorneys. He is one of Northern Virginia’s most experienced personal bankruptcy lawyers. As an expert on changing consumer bankruptcy laws, Robert Weed has been interviewed on local and national TV and quoted in newspapers across the country.

  • Rose B.

    December 18, 2011, pm31 3:50 PM

    Is there a bank similar to TD bank, located in the Kansas City, MO area? I don’t live that close to the coast, unfortunately.

    • Robert Weed

      December 18, 2011, pm31 4:03 PM

      Woodforest Bank, found in some of the largest Walmarts, will also open an account for most people whose credit is too bad to get an account at most banks.

  • nathaly

    December 31, 2011, am31 1:43 AM

    If I owe wells fargo,can I open a bank account like at Union Bank?

    • Robert Weed

      December 31, 2011, am31 9:51 AM

      I don’t know who Union Bank is, but, sure, why not?

  • yvonne

    June 27, 2012, pm30 10:31 PM

    I got a warrant in debt and my question is can my bank account be froze when i am on social security and it is direct deposited in my account. I bank at Wells Fargo.

    • Robert Weed

      June 28, 2012, am30 6:50 AM


      Obama put in a regulation that the bank has to LOOK at your account and see what’s social security. And the social security that’s direct deposited can’t be frozen for the garnishment.

      Are you wondering if you should just IGNORE the warrant in debt? I’d sure talk to a lawyer before you decide that’s what you want to do. If social security is basically all you have, we’d be glad to talk with you for a real, personal consultation at no charge…

  • naomi

    December 4, 2012, am31 11:26 AM

    I have a question ..we have navy federal account and two car loans on there and a unsecured card and secured card card says secured but we didn’t put money down to get it…well we simply can’t pay cards now…times are tough.. we will pay car loans though…we recently switched checking and savings to new bank…will navy find us and take money when we transfer funds to pay cars..or will they take our cars since we aren’t paying them for our cards? Can they put a lien on our house or anything like that? Thank you!

    • Robert Weed

      December 4, 2012, am31 11:36 AM


      Navy Fed can and will apply the car payments to the credit cards when you get a month or so behind–and then threaten or actually repo the cars.

      But, no, they cannot go and get money from your new bank without first taking you to court and getting a judgment–in most places that takes somewhere between six months and a year.

  • km

    January 25, 2013, am31 8:56 AM

    I have banking accounts with bank of America and am filing chapter 13 today. One of my credit cards is the them. Can they freeze my account? I am not sure if I have time yo change accounts plus direct deposits. I would rather stay with them due to all of my direct deposits but definitely don’t won’t my account frozen. Thanks!

    • Robert Weed

      January 25, 2013, am31 9:15 AM


      You should be ok. Credit unions are allowed to grab and empty your checking account to pay themselves for a credit card, but banks can’t.

  • Scott

    March 26, 2013, pm31 10:18 PM

    I have my checking and also an unsecured overdraft line of credit with Wells Fargo. I have a separate signed line of credit agreement with them that stipulates interest rate, credit amount, etc and it also says I pledged no security on the line of credit. I can’t afford to make the payments on the line of credit any longer. Can they offset my checking account to pay the line of credit?

    • Robert Weed

      March 27, 2013, am31 6:21 AM


      You are saying the overdraft line of credit is unsecured–I thought they were always secured. Get your money out of Wells Fargo–then you don’t have to worry about whether you understand the fine print.

  • Grant

    April 3, 2013, am30 9:55 AM

    Thank you for the informative article!

    I paid off my vehicle about 4 years ago, but my credit union is refusing to release the lien while I have unpaid funds on a credit card with them. I just want to sell my old car. Can they legally hold the lien on my vehicle if I have another line of credit open?

    • Robert Weed

      April 3, 2013, am30 11:08 AM


      Yeah, they can. It’s illegal for banks but credit unions can and do. Maybe I should do a blog on that topic. I tell all my clients who have car loans with credit unions when we first meet.

  • Jeff

    August 21, 2013, am31 5:03 AM

    I have a Wells Fargo account that just had a lien put on it for back child support. They withdrew legal fees for the process and put me in the red, big time. Can I add the money to the account to bring it up to $0 and then close the account?

    Thank You!

    • Robert Weed

      August 21, 2013, am31 10:34 AM


      Yes, makes sense to me.

  • ME

    October 7, 2013, am31 12:22 AM

    Dear Robert Weed:
    I live in Florida. I’m considering filling bankruptcy ( chap. 7) due to a $40,000 (4 days) emergency medical bill. I had a credit union account and just close it. Is it safe or smart to stay with out a bank account during bankruptcy?

    I’m also married and have a mortgage together and worry my partner’s will be hurt in any way. What can I do? we both have excellent credit!! and separate account and credit.

    • Robert Weed

      October 7, 2013, am31 10:22 AM


      You need to talk to a lawyer in Florida. One area where states have different laws is whether your spouse is responsible for your medical bills. That’s where you need to start.

      It is probably neither safe nor smart to go without a bank account–it could easily be bankruptcy fraud. Different judges see that differently, but it’s dangerous almost anywhere. Could get your bankruptcy disapproved–and there’s some very slight chance of worse.

      • ME

        October 8, 2013, am31 1:06 AM

        Dear Robert Weed:
        Thank you very much. I wish you could be m lawyer.

        • ME

          October 8, 2013, am31 1:50 AM

          Dear Robert Weed:
          I worry about them garnishment my wages. I have already started the process by closing my exciting account. but when I open a new account will the judge look at my “ferly new bank account as bankruptcy fraud or disapproved? because is only few months old.
          if so…how long you suggest I should wait in filing for chapter 7? after opening a new acct.

  • Robert Weed

    October 9, 2013, pm31 7:29 PM

    No bank account causes much more suspicion than new bank account.

  • Steve

    December 1, 2013, pm31 8:46 PM

    Dear Robert,
    i live in NY state. I have about $40k in credit card debt and I can pay any longer bc together we make $45k a year. I am married and the debt is on me and my wife. I have an acccount with around $22,000 saved for rainy day. I dont owe any $ to HSBC.

    If we file bankruptcy ch7 can I keep our life savings?

    • Robert Weed

      December 2, 2013, am31 10:54 AM


      You need to talk to a lawyer in New York. I’m sorry but I don’t know anything about what New York let’s you keep.

  • Jake

    December 26, 2013, am31 5:02 AM

    Any recommendation for a checking/savings account in Seattle, WA?

    Are big banks–aside from Wells Fargo– ok? I am planning on filing for Ch. 7 in 6-months time. My income is taking a huge plunge and I won’t be able to meet the needs of my budget and make debt repayments. I want to change my bank accounts to a place where I owe no money but don’t want to worry about any repercussions such as a freeze on my accounts.

    Thanks for your help. Glad I found your page

    • Robert Weed

      December 26, 2013, am31 11:05 AM


      Sorry I don’t know anything about West Coast banks.

  • Charles ortisi

    February 7, 2014, am28 2:35 AM

    I just filed chapter 7 and live in maryland. Wells Fargo froze 20,000 dollars of mine . I don’t owe them any money can I get my money back like get it unfrozen ?

    • Robert Weed

      February 7, 2014, pm28 4:21 PM


      Oops! Your lawyer might not have known Wells Fargo would freeze your account, but did he know you had $20,000. I went to law school in Maryland in the 1970′s and haven’t been back recently. But I’m not sure Maryland law lets you file Chapter 7 and keep $20,000. The bankruptcy trustee may want it. (The reason Wells gives for freezing accounts is exactly what you have done. Filed Chapter 7 with money in the bank that your bankruptcy trustee will want to take from you.)

  • Joey

    February 12, 2014, pm28 10:11 PM

    I pay all my bills every month but because of my pending divorce i have two cars, two credit cards and a consolidation loan in my name. I have a 700 or so credit score but i am barely making it after payday. Would bankruptcy help?
    I have a small child that I dont get any support for. And the bills are becoming a vicious circle.

    • Robert Weed

      February 13, 2014, am28 11:26 AM


      You absolutely need to go talk to a bankruptcy lawyer. You are smart to know that your 700 credit score is not the most important thing in your life. Being able to borrow more money because your score is 700 is not really much good if then you can’t pay it. (Depending on the age of your car, you might want to use your 700 score to get a newer car before your score tanks. Talk to your lawyer about that. Your lawyer may not be able to bring that up, but you can. I talk about that, here.

  • Steve

    February 28, 2014, am28 1:30 AM

    I filed for ch 7 bankruptcy and just received my discharge notification. My Bank of America checking account was not frozen and I can still use it. I was wondering if Bank of America can take future money that I put into my checking account since I listed them as a creditor in my case? I don’t want to start saving money and find out in a year or two that they can somehow offset the account for the credit card debt I had before filing. Will I be alright to just keep that account and use it or should I try and find a new bank for my checking/savings? From what I understand, they cannot use any post-petition funds to cover any pre-petition debts. Just making sure. Thanks

    • Robert Weed

      March 1, 2014, pm31 9:46 PM


      Right. Why doesn’t your lawyer answer your questions?

      • Steve

        March 3, 2014, am31 3:18 AM

        Thanks Robert. I just payed a company to prepare my bankruptcy paperwork and file it because it was a pretty simple case. I had to do a lot of the research on my own. I was advised by someone who had a bankruptcy to change banks even after the bankruptcy but it’s hard to open a new account with bad credit. I just hope that I will be alright keeping my same checking account open since I owed money to them before the bankruptcy.

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