If you are considering filing bankruptcy, I recommend that you close all of your bank accounts with Wells Fargo before you file Chapter 13 or Chapter 7. I realize that it is a pain to get your payroll to change the direct deposit to a new bank account. However, you don’t want to run the risk of your account getting frozen.
Wells Fargo is the only bank I know of that will freeze your bank account as soon as you file bankruptcy even if you don’t owe them any money.
Wells Fargo claims that they are required to monitor the entire bankruptcy system of the United States and freeze the checking accounts of anyone who files bankruptcy. I think this is absolutely ridiculous.
In almost every bankruptcy case that gets filed in Georgia, all of the money in a checking account will be exempted. The Georgia wildcard exemption is $5,600.00 for a single filer and $11,200.00 for a joint filer.
The end result of Wells Fargo’s bankruptcy policy is that it drives clients away and creates a lot of extra work for bankruptcy trustees.
I recently had a case where Wells Fargo froze a client’s checking account. This client lost a lot of sleep wondering if she would have enough money to pay her rent, food, gas and other basic living expenses. Can you imagine the needless stress this client suffered? Fortunately for us, we had a super nice trustee that was willing to instruct the bank to release the funds within a few days of the filing.
Do you think my client will ever even consider banking with Wells Fargo in the future? I think not.
I can understand that a bank wants to protect itself from lawsuits and sanctions by a bankruptcy court. However, I cannot imagine that any bankruptcy judge would ever require Wells Fargo to monitor the entire bankruptcy system and freeze the accounts of people who they suspect may have funds that cannot be exempted in bankruptcy.
I hope this policy will soon change.
Other Posts you might be interested in reading
3. How much does it cost to file?
6. Secrets from the debt collector’s playbook