Under the Bankruptcy Code, you have certain rights and protection as a debtor in bankruptcy. Although limited, your creditors also have certain rights and protections. Your bank is a creditor and banks, credit unions and other financial institutions may take certain actions that could be adverse to your interests, both BEFORE and AFTER you file for bankruptcy.
Here are actions you can take that are to protect your money and assets.
- Set-Offs. If you have credit cards, lines of credit, personal loans, or any other unsecured form of credit at either a bank or credit union where you also have a checking or savings account, you need to move your money! If you stop paying on your account or loan and fall into default, your bank will help itself to your money in your account. This is called a “set-off” and it’s perfectly legal and your bank will take your money without notice and without your consent. If you are filing for bankruptcy, you need to close your bank and/or savings account and move your money to a financial institution where you do not owe money, or at least stop using that account until you have received a discharge. You can chose any bank or credit union except Wells Fargo Bank and U.S. New Mexico Federal Credit Union. See “Administrative Freezes.”
- Administrative Freezes. It is the policy of certain banks and credit unions – most notably, Wells Fargo Bank and U.S. New Mexico Federal Credit Union – to “freeze” the accounts of its customers who file for bankruptcy. It’s called an “administrative freeze.” The banks claim it’s to help the bankruptcy trustee while your bankruptcy case is pending in the state of New Mexico. If you have any checking, savings, or other deposit accounts with either Wells Fargo Bank or U.S New Mexico FCU and you plan to file for bankruptcy, close your accounts and move your money to another financial institution.
- Automatic Withdrawals. Many people pay their bills through automatic withdrawal from their bank accounts. If you are planning to file for bankruptcy, you may need to review which bills you are paying through automatic withdrawal. Utilities, insurance, phone bills, etc. are fine to continue to pay through automatic withdrawal. Although, credit cards, lines credit or personal loans, and any other unsecured forms of credit should be stopped.
Since your unsecured debts will be liquidated in your bankruptcy, you don’t want to run afoul of the “90-Day Rule.” If your bank won’t stop the automatic withdrawals, simply close your bank account. If you have a secured loan, (car and/or mortgage) and you want to keep your car and/or house, you should continue to pay these loans.
However, if you don’t want to keep your car or house the stop paying on the loan. Once you do that, the lender has the right to repossess your car and/or foreclose on your home. Also, some creditors block your ability to pay online or through auto drafts until after the bankruptcy is over.
In Albuquerque, Giddens & Gatton Law,amp; Jacobus P.C. has bankruptcy attorneys who offer expert handling of Chapter 7, Chapter 11, Chapter 12 and Chapter 13 bankruptcy cases and can specifically provide advice as to bankruptcy and its alternatives.
The New Mexico firm represents many debtors and creditors in Albuquerque, Santa Fe, Taos, Raton, Farmington, Gallup, Grants, Roswell, Los Lunas, Placitas, Belen and the rest of New Mexico. Contact Giddens & Gatton Law,amp; P.C. at (505) 271-1053 to set up an appointment or visit the firm’s website at giddenslaw.com. Giddens & Gatton Law,amp; P.C. is located at 10400 Academy Road N.E., Suite 350 in Albuquerque, New Mexico.