If you’re struggling financially, your debts and obligations may seem looming and unmanageable, but for many, the idea of bankruptcy is even more alarming. At Behm Law Group, Ltd., we find that many of our clients have had no reason to become familiar with the process of bankruptcy in the past and have unwarranted fears of how bankruptcy may impact them. If you’re balking over filing for bankruptcy because of an apprehension of negative side effects, let us help you. Bankruptcy is designed to help debtors regain their financial footing, and with Chapter 7 bankruptcy in Owatonna, MN, you can get the fresh start you need.
Many individuals hesitating at the thought of bankruptcy have worries about how the process will impact their credit and properties. For example, the fear of how your bank account will be handled is a common source of anxiety during bankruptcy.
These fears, however, are unnecessary nearly 100% of the time. In fact, for the vast majority of individuals filing for bankruptcy, a case in itself will not affect your bank accounts in any way. Checking, savings, and other types of bank accounts are left untouched in the typical individual consumer Chapter 7 bankruptcy case.
When Your Bank Account is Impacted
Although most of the time an individual filer’s bank accounts will not be touched during a bankruptcy case, there are a few unusual circumstances that may affect the status of an account or the value within. These circumstances include:
- If a debtor has a total balance across all accounts that is greater than the exemption allowances they are allowed with which to protect property
- If a debtor owes funds to the bank or credit union where their accounts are held
- If a debtor owns accounts with banks or organizations that freeze accounts during a Chapter 7 case (e.g. Wells Fargo or Union Bank or Bank of the West)
Except for these uncommon circumstances, a Chapter 7 bankruptcy case does not generally impact bank accounts.
Protection with Exemptions
When filing for Chapter 7 bankruptcy in Minnesota, individual filers may choose to use state exemptions or federal exemptions. In the case where your bank account funds are not exempt from the process of liquidation, those funds are considered assets and are surrendered to the bankruptcy trustee. If your funds can be protected by an exemption, however, they will remain untouched during the bankruptcy case.
Exemptions that protect your bank account funds vary from case to case depending on how you choose to use certain transferable exemptions, such as the federal wildcard exemption.
The fear of losing the money in your bank accounts should not prevent you from filing for Chapter 7 bankruptcy in Owatonna, MN. For more information about how your bank accounts are impacted during the bankruptcy process and for bankruptcy consultations, contact Behm Law Group, Ltd. at (507) 387-7200 today.