Even between the funds saved in your bank accounts and your scheduled income deposits, you may not have nearly enough to keep up with your monthly debt payments. This is not to mention that paying off all these debts in full may seem inconceivable to you. This is why you may try to save yourself through a consumer bankruptcy petition. However, in doing so, the security blanket you kept in your bank accounts may be subsequently threatened. Without further ado, please read on to discover what happens to your bank accounts in bankruptcy and how a seasoned Rockland County bankruptcy attorney at The Law Offices of Allen A. Kolber, Esq. can help you salvage anything possible.
What happens to the funds in my bank accounts in bankruptcy?
Of note, you may be able to preserve some of the funds saved in your bank accounts, depending on what New York State bankruptcy exemptions you choose to claim. That is, with the homestead exemption, you may protect your Rockland County primary residence up to a value of $179,975. However, say you do not own property, or otherwise, your property is worth less than all the liens placed on it. In this case, you may forgo the homestead exemption and use the alternative cash exemption. Here, you may exempt up to $6,000 of cash on hand, bank account funds, and anticipated tax refunds. What’s more, the wildcard exemption may protect cash on hand, bank accounts, and other personal property of up to $1,175.
All of this to say, your appointed bankruptcy trustee may calculate the amount in your bank accounts that is over and above the provided exemption amount. Then, they may take anything in excess of this to start paying off your outstanding creditors in your bankruptcy proceedings.
What rights does my bank have over my accounts in bankruptcy?
It is worth mentioning that, upon hearing the news of your bankruptcy filing, your financial institution may freeze your bank accounts in an effort to preserve these funds for your outstanding creditors. Importantly, though, they can only do so for funds that exceed your claimed exemptions and that were deposited pre-filing. If you believe there is an issue with how they handled this, you may work in tandem with your attorney to get them to lift the freeze.
Also, you must understand that there are potential problems if you hold your bank accounts with the same financial institution where you got your loans from or otherwise have your debts with. This is because they may possess what are known as “set-off rights.” Here, they may reference your agreed-upon contract provision, which states they can withdraw funds from your bank accounts and apply them to your loan balance(s). Unfortunately, this has the possibility to supersede your bankruptcy exemption rights.
To give yourself enough time to develop a solid case, please be sure to get in touch with a competent Rockland County bankruptcy attorney from The Law Offices of Allen A. Kolber, Esq. as soon as possible. We look forward to hearing from you.
