04
Oct 2011Bankruptcy and bank statements
Posted by Robert Weed / in General Information About Bankruptcy Law / 43 comments
Bankruptcy and bank statements
Planning to file bankruptcy? You will need to round up bank statements. You’ll need them at the beginning of the bankruptcy process; and you’ll need them again for your bankruptcy hearing.
(Here are specific instructions on what bank statements you need for your bankruptcy hearing in Alexandria, Virginia.)
Since you need to tell the bankruptcy court about all your accounts when you file your bankruptcy papers, you want to talk them over with your lawyer early–in time to identify and fix any problems.
Bring bank statements on every account in your name, when you first meet with your bankruptcy lawyer.You will need to tell the court about every account your name is on. So you and your lawyer needs to know what those accounts are.
Does that include the account with only five dollars that you never use any more? Yes.
Does that include your mother’s account that she “just put your name on in case of emergency”? Yes.
Does that include the account where only your wife’s paycheck goes, but is in both names? Yes.
Does this includes credit unions, too? Yes.
Does it includes accounts you have with your minor children? Yes. And also college savings plans you have for them.
Does it includes money markets? And investment, brokerage accounts? Yes and yes. And Bitcoins; and Paypal accounts. And accounts you have overseas.
More than just banks, it includes every place you have money.
When you first talk to your lawyer, you need to talk about all those accounts. So bring bank statements–and other accounts–with you.
Is your mother’s $200,000 life savings–in the account you are on “for emergencies”–going to be a problem? You want to talk that over when you first meet with your lawyer. Do not wait and bring it up when you are signing the final draft of your bankruptcy papers.
The same thing with your wife’s account that’s “in both names.”
When you bring in the bank statements, then you are not guessing. You and your lawyer can see whether, and how, your name is listed on each account. And how much money goes through it every month.
Both of those can be important to getting your bankruptcy approved–without having the bankruptcy trustee take some of your money. (Or worse, take some money that’s not yours–that belongs to someone else in the family.)
Getting through bankruptcy, without losing any money, may take some planning. Your lawyer may have your wife change her direct deposit to a different account–one only in her name. Your lawyer may want mom to take all the money out and put it in a different account. Maybe the lawyer will just want proof of where mom got all that money.
Besides the bankruptcy trustee maybe grabbing those accounts, some of your creditors might try to get to them. Your lawyer will want to compare your accounts with your creditors–and may suggest you change banks for that reason.
All that takes time and planning–so make sure you bring in all those bank and other account statements at the beginning.
Toward the end of the bankruptcy process, you are required to show those statements to your bankruptcy trustee. What statements? Every one that your name is on.
You need to give your bankruptcy trustee copies of your bank statements. That can be a big headache.
Those will mostly be the same accounts that you went over with your lawyer at the beginning, but maybe with some changes. If you have accounts that you don’t use, your lawyer may have told you to close them. If your accounts were in a bank where they weren’t safe, you may have new accounts now.
The bankruptcy trustee is looking at your account statements for two reasons. First, because the law (Bankruptcy Rule 4002) requires it. Second, to see if you had too much money on the day you filed your bankruptcy case. (“Too much money” meaning enough that the bankruptcy trustee can grab some of it.)
Sometimes getting those bank statements is a problem, if you wait until after your case is filed. Some banks, and especially some credit unions, stop sending statements when they get notice of the bankruptcy. And they may cut off your internet access, too.
(Stopping the statements and cutting off internet access is most likely a problem if you owe money to that bank. They don’t want to be violating the bankruptcy law by trying to collect your old debts, so they just stop sending you ANYTHING.)
I recommend a two step process. First, when you come in for your court preparation appointment, bring your most recent bank statements. Those may be a few days, or even a few weeks old.
Then, the day after your bankruptcy case is filed and your papers go down to the court, get an internet print out from the end date of the last statement on through to the day after your bankruptcy is filed. Take care of that right away–in case the banks and credit unions cut off your internet access when they get notice of the bankruptcy.
Taking care of bank statements–and all account statements–both early and late in the bankruptcy process, is a key to have your bankruptcy case go smoothly.
Bankruptcy and bank statements: Update–there’s now a charge
Filed a bankruptcy case for some folks last week who had SIXTEEN bank accounts. Half of them they hadn’t used in years, but kept open because it was too much trouble to close them. Now they are trying to get account statements showing the date the bankruptcy was filed, and the bank is not cooperating.
Duh–if you’ve left a three dollar balance on a bank account for four years, the bank is NOT going to consider you a good customer. And if you thought it was too much trouble to close those accounts before you file bankruptcy, see how much trouble it is to get that bank statement balance now that you have filed bankruptcy.
You need to do yourself–and the bank–and the bankruptcy court a favor and close accounts you are not actively using.
So, I’m starting to charge. I’m charging for the extra paperwork we have when people have multiple, unnecessary bank accounts.
For a single person, your first THREE bank accounts are free. If you have more than THREE! accounts on the day you file bankruptcy, there’s a $50.00 charge.
For a married couple the first five are FREE. After five, there’s a fifty dollar charge.
(You also get one more for free for each child you have.)
Each bank account you have means a lot of work–for you, for me, for the bankruptcy trustee. And the more you have, the harder it is–for you, me. and the bankruptcy trustee–to make sure they are all covered. So, close ’em.
If it’s too much trouble to close them, I’m charging for the extra paperwork on my end. You will still have to do extra work to get each statement balance. And if you get sent home from your hearing because the trustee thinks you missed one statement, you were warned.
So, close those accounts you’re not using.
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Robert Weed has helped fifteen 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.
Stephanie
How much money should you keep in your bank account before you file for bankruptcy? Is an amount that is exempt in Virgina? or are you at the mercy of the bankruptcy court?
Robert Weed
It depends on your state law–on your projected tax refund next year–and on everything you own.
CB
The trustee is making issue with my mothers account that she has me in as joint/secondary – she is 79, and it is a combined savings/checking. I have never touched that account for anything personal, nor have I ever put anything into either the checking or savings. I have statements going back almost seven years. She has over 13,000 in her savings, and 3500 in checking. I am estranged from my mother now, but I am very concerned they will take her money, which is her life savings and social security. What can happen in this situation?
Robert Weed
CB:
There’s a law in Virginia that says the money in the bank belongs to whoever put it there. Code of Virginia 6.2-606. (Unless it’s husband and wife; then it’s 50-50.) I hope there’s a law in your state that says about the same thing.
CB
Thank you Mr. Weed – we’re in FL. I hope that a similar law exists- my attorney sent a letter to the trustee explaining this situation, and he (atty) doesn’t seem concerned.
CB
341 came and went. The trustee questioned my mothers account and my atty stated he will get documentation showing that I have not contributed or removed money from that account. Today I received a letter from the trustee that he is retaining counsel for a possible rule 2004 examination – I am waiting for my atty to respond to me so at this time I am terrified. I gave my lawyer over 6 years of statements from her account today.
Robert Weed
CB:
As long as it is your mother’s money in that account, you shouldn’t be terrified.
(I’m a Virginia lawyer and Virginia law is clear that the money belongs to whoever put it in–hoping the law in your state is the same.)
Cb
Again, thank you – it was brought to my attention that this may be because I am a 9/11 victim and I am listed on that lawsuit that I added to my schedule (which will be practically nothing, and not for many years). My atty feels thats what they are digging for.
nancy
I have joint account with my boyfriend and I filed bankruptcy on 4/13/15 that same day my boyfriend deposited a check for a loan he took out. What do I need to do in regards to this to prove it’s not mine?
Robert Weed
Nancy
You need to do enough to persuade the judge.
Tanya
Our bank statement shows purchases from a vacation we took – will that be ok?
Robert Weed
Tanya:
Depends; where did you go, how much did it cost? How soon was it before you file bankruptcy? When was the last time your took a vacation? All those are questions your lawyer will ask you.
Margaret
My stepmom ansorbed some of my debt about 4 years ago on a 0% apr card that I now pay monthly through auto pay. My name is not on the card, but the money does come automatically out of my checking towards her credit card in her name. Would this be something that will be red flagged or looked as my debt? And if so how would that affect her?
Robert Weed
Margaret:
You filing bankruptcy won’t touch that debt on the card at all. If you don’t keep paying, your mom will have to. But you can keep paying if you want. (It’s a good thing you are paying the card and not mom. Paying mom could be a problem.)
Shewmake
My dad filed bankruptcy almost 1 1/2 years ago and since that time he has not received a bank statement from his credit union. They keep saying that he should be getting one and will charge him $2.00 to print him one out. Just recently he called again and they told him that he should be getting one and maybe he needs to check with the post office, even though his address has not changed. It can’t be a coincidence that all of a sudden his bank statement stops the month after he files bankruptcy. Is this legal, can they withhold his bank statement?
Robert Weed
Shew:
Now and then little annoying stuff happens around the time of a bankruptcy. I don’t know of anything you can do about it.
Shewmake
That’s what I thought, I guess it would be best for him to move his account.
Thanks for your response.
Deborah
I filed chapter 7 bankruptcy just found out mom has 74,000.00 in money market acct and without telling me put my name on the account Will they take her money for my bankruptcy? My brother and sister are also on the acct. she did this in case she had to go to a nursing home one day. Now my lawyer is mad and said I lied to her. Please help Wells Fargo froze her account my lawyer said just have her write a letter and explain this is not my money. And not an inheritence. Will this work?
Robert Weed
Deborah:
Under Virginia law, the money in your mom’s account would belong to her–if she can prove she’s the person who put it there. the laws in your state might be different.
One thing I trie to tell all my clients. “If you are on First National of Detract with your Grandmother, close it.”
Marie
yesterday I spoke to a lawyer about declaring bankruptcy, in Ohio. He suggested chapter 7, because I have sold every asset to pay off my debts. I have 1 bank account, and no other assets, that I know of bc I still owe on my car (12,086.81). I am concerned because last year I claimed under 5,000 in income, hence why I have no assets, I sold my jewerly art ect to supplement and my boyfriend moved in to help. This year my business has tripled in profit but I still am just breaking even, because my expenses has doubled (I’m a hairstylist), and I paid off minor debts I owed (personal loans from family and 1 old credit card. I’m afraid I’ll be denied chapter 7, and that’s what the lawyer recomended we try for. I was wondering if I’d be better off just going for chapter 13, and if I would get in any legal trouble for trying for 7. My bank account today is $441.55 balence, I don’t get a regular pay check bc I get paid per customer. This year I’ve been averaging 900 per week, in earnings if it helps you answer my question. Thanks.
Robert Weed
Marie:
My general view is that Chapter 7 is better than Chapter 13 for most people most of the time. You haven’t told me anything that points me in a different direction for you. But I get 37 pages of info on my clients before I make a recommendation, so I can’t make any recommendation for you.
Frances
My bank statement shows I withdrew money from the casino. What will my bankruptcy lawyer say? Will he cancel the bankruptcy proceedings? Or, will it go badly for me as far as proceeding with my bankruptcy?
Robert Weed
Frances:
The papers you file with the bankruptcy court ask you if you had gambling losses. Hope you told the truth there. Some judges are very harsh about gambling debts. They think that taking money to gamble is somehow dishonest. Other judges say it’s just another debt. Those judges say that if the credit card companies didn’t want you gambling with their money, they shouldn’t have ATM terminals in the casinos. I don’t know your judge.
CHELSEY
If I blew through my nearly 9k tax refund in the month prior to my bankruptcy will my chapter 7 be denied by the trustee when they look through my bank statement?
Robert Weed
Chelsey:
Maybe. It depends on how hard they look at it and on more details on what you did when you “blew through” nine thousand dollars.
Juliet
I am in great big trouble with Casinos and the law owe alot of money to loans alot of them due to gambling, I am in treatment for gambling but have made some mistakes and have withdrawn money from some Casinos from time to time out of financial desperation, will that hurt my ability to file chapter 7 also I want to take money out of my pension and 401K to pay the IRS and file bankruptcy can that affect my bankruptcy as well?
Robert Weed
This is way more complicated that anything we should try to answer on the internet.
What casinos? In Vegas not paying Casino markers can be a criminal law issue. Most places, it’s just a debt.
christina
I filed chapter 7 already. Was advised that I now have a 2004 exam. Spoke to my Dad about this since I was worried he then advised me that I am on his bank account. Said he put me on it when he became sick. I had no knowledge of this account until yesterday. What do i need to do to ensure my Dad’s account is safe. He is disabled and living on a fixed income however there is a great deal of money in the account so he says. The money is from his 401k and pension. I filed in AZ but live in Texas now my dad lives in Florida.
Robert Weed
Christina:
You and your lawyer need to take a careful look at what they law is in the state where the bank account is located.
Angel McGehee
Why is trustee making big deal with my bank statement cause it shows small amounts deposit and I’m not working but getting help from family and friends to help me out while unemployed. Is that a problem?
Robert Weed
Angel:
It would have been a good idea to make a note on your schedule I that while you were employed you were getting help from family and friends.
Sandra Boisvert
My brother is deceased and did file bankrupt prior to his death. I continue to receive statements from Santander Bank. I continue to call and tell them he is deceased but continue to get statements. How can I stop them.There is a number for disputes but the line keeps you on hold and no one answers. My understanding was it was against the law to mail statements to individuals who filed bankrupt.
Robert Weed
Sandra:
Talk to the lawyer who handled your brother’s bankruptcy case. See what he thinks the judge where you are would do, if you made a complaint.
Roseanne Demarest
My father is filing bankruptsy, he has six months statements to give, he had a balance at month end. it varied from 800-2500 depending on the timing of the deposits. Is this going to be an issue since the Lawyer did NOT go over them obviously or he would have brought that up!? for example, he had a tax return in Feb this year, that rolled over and his expenses going out matched his income, but the roll over of money is an issue. He is 41,000 in credit card debt and he really cannot afford to pay it back, right now he has like 700 in his account and he is no longer rolling over a huge amount since the filing. HELP!!! Court is July 9th, 2018 and my lawyer will not return calls or emails!! ergggg – The state is NJ…
Robert Weed
Rose:
Each state has different rules on how much money is safe to keep. I don’t know the rules where you are; I expect the lawyer does.
Laura
Hello, my husband is considering filing for bankruptcy. We bought a house, he got let go, and we had to move to another state for a new job. We had built the house in California and couldn’t sell it, we got tenants in but they did not cover the whole mortgage payment of $4000 (thanks California) and so we were behind every month. Then he got let go for 5 months and we charged everything to stay afloat. He got employed again in his industry and makes okay money but way less than we used to so we racked up debt. We are living with inlaws who pay 1/2 rent and we get money from tenants but it doesn’t cover the mortgage and we fell behind. We were told we make too much for Chapter 7 and should do Chapter 13. I am *not* filing, the house mortgage is in his name only. I am just on the title. I’m worried because we share bank accounts and if the bank cuts off access — how will I have access to my account? Also, if we do Chapter 13 and later he makes more money – can they take that over the 3-5 year period? I really don’t want to do Chapter 13, I am not trying to wipe out debts, just get a handle on it. We are trying to sell our house and hope to break even — realtors take $30,000 in commission so we won’t be able to pay off debt which was our plan. Plus our lease runs out in new state and we need to be able to have a place to live. Can we buy a house after Chapter 13? HIs parents have helped us so much and we’re helping them because they’re elderly — my family hasn’t helped at all which is really disappointing. Do you have any advice if we file for Chapter 13 or some other plan we could do? We just turned 50 and I’m an Adjunct Professor so I don’t make much money but am constantly looking for jobs.
Robert Weed
Laura:
I don’t know how much money he’s making but I’d try a second lawyer, and spend a lot of time on your budget, before I gave up and filed Chapter 13 instead of Chapter 7.
Helping elderly parents is one budget item that can help you qualify for Chapter 7, how much time did you and your first lawyer spend on that?
If you are not filing, any non-family expense of yours can also help qualify you for Chapter 7. Did you spend time with your lawyer on that? For example, do you have student loans you are paying? Are you funding a retirement for yourself?
To answer your questions more directly. Many courts, including the one where I am, do allow the Chapter 13 trustee to grab more if your husband’s income has a substantial, unforeseen increase. What those terms mean varies by Judge.
Yes you can buy a house after Chapter 13. there are some lenders who will approve you for a mortgage while you are in Chapter 13; although very few. You need to check around.
Laura
I also forgot to ask, how many months of bank statements do they ask for when you file Chapter 13?
Robert Weed
Just one to start. but they often then request six.
Ansh
Hi Sir, I live in Texas. Do we need to declare international bank accounts too? Also, if we move funds prior to 6 months, they will never ask for more than 6 months of bank statements? Thanks in advance.
Robert Weed
Ansh:
Yes you need to declare international bank accounts. AND if they have reason to ask, then they WILL ask for more than 6 months bank statements.
You need to talk carefully to a lawyer about LEGAL ways to accomplish what you are trying to do.
John
For the State of Virginia, how many months bank statements do they ask for when you file Chapter 7 bankruptcy?
Robert Weed
Usually one or two