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Bankruptcy Law

What Happens to My Bank Accounts in Bankruptcy?

Bankruptcy Law A common question we get from clients is whether or not they can keep or even open bank accounts during the bankruptcy process and after.  There is nothing in the bankruptcy law that prevents you from having or even keeping a bank account open.  There are some things that you may want to take into consideration if you do keep your account open.

If you are in the bankruptcy process and have an account open with a bank or credit union that has loaned you money, you may want to open an account at another institution that you don't owe anything to.  Banks have the right to "set-off" your cash balance (which is money they owe you) against your debt to them (money you owe them).  Even if your loan account with them is current, the money in your bank account can be used as collateral for the debt.  If you intend to reaffirm this debt (a car loan, for example), it probably won't matter.  However, if you wish to discharge this debt in your Bankruptcy, you may not want to risk being left suddenly with no funds in your bank account for daily expenses.

If you have an account that may be subject to set-off, you don't necessarily have to close the account.  You can just leave a small amount and open a new account at another institution until your bankruptcy is complete.  If you have further questions about this, please contact us at 631-289-4600.  We can go over your individual situation with a free consultation and advise you on how to handle this matter.   


The better practice would be to deposit money after you obtain a discharge in bankruptcy, which would take approximately three months in NY. However, you can deposit money after the bankruptcy is filed, but it is recommended that said money is not deposited into a bank which is one of your creditors.
When is it safe to deposit money into my bank account once I filed the bankruptcy? either a bank I don't owe money or a bank I owe money .
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