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In general, you don’t have to worry about your savings and checking accounts if you file for Chapter 13 bankruptcy in Raleigh, NC.
You can even open new bank accounts as long as the court approves it. You can even have your Chapter 13 payments deducted automatically from your bank account to make the process more convenient.
However, Chapter 13 debtors are not completely immune to having their bank accounts garnished.
Here’s a closer look at what you need to know about your savings and checking accounts if you’re considering Chapter 13 bankruptcy in Raleigh, NC.
Chapter 13 Protects Your Bank Account Funds (in Most Cases)
Chapter 13 bankruptcy is often called a “reorganization” bankruptcy because it allows debtors to reorganize their debts and create a repayment plan to pay back their creditors over time.
Unlike Chapter 7, which liquidates your assets to pay off your debts, Chapter 13 lets you keep your property and assets. This includes your savings and checking accounts
In some cases, Chapter 13 may also allow you to keep funds in your bank account in excess of the exemption amount. The caveat is that you’ll need to work these excess funds into your Chapter 13 repayment plan.
Banks, Credit Unions & the “Set-Off” Privilege
While Chapter 13 bankruptcy offers protection for your bank account funds, it’s not 100% immune from creditors.
Namely, banks and credit unions have what’s called the “set-off” privilege. This allows them to take funds out of your account to pay off any debts you owe them.
This is particularly common among credit union members, who usually have auto loans, personal loans, mortgages, and other debts with their credit unions in addition to their checking and savings accounts.
Still, that doesn’t mean they can just take funds anytime they want from your accounts. If you’re concerned about this happening to you, please mention it during your free consultation with Attorney Weik.
What NOT To Do If You Have Bank Accounts & Are Considering Chapter 13
Chapter 13 has powerful protections in place for debtors – as long as you avoid sabotaging your own filing in the first place.
Never do the following to your bank accounts if you plan on filing for Chapter 13 in Raleigh:
- Don’t make any large deposits or withdrawals without consulting with your Weik bankruptcy attorney first.
- Don’t try to hide any assets by transferring them to friends or family members. This is considered fraud and can result in jail time.
- Don’t close or open any bank accounts without prior approval from the court.
- Don’t sign over any bank accounts to anyone else without court permission.
- Don’t take out new loans or lines of credit without first informing Attorney Weik and getting court permission.
There are other things to avoid doing as well – which is why it’s always best to consult with a knowledgeable Raleigh Chapter 13 bankruptcy attorney before taking any action.
Call Weik Law Office today at 919-845-7721 for a free consultation, and set up a time to speak with one of our friendly professionals. We look forward to hearing from you soon!