Can a Bank Take Money from Your Savings Account After a Bankruptcy Discharge?

Written by James Hirby | Fact checked by The Law Dictionary staff |  

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First, find out from the bankruptcy trustee if your savings account was on the list of seized assets that are to be liquidated to satisfy the creditors under your bankruptcy ruling. If the account was not on that list, then notify the trustee about what happened to get that money returned to you. Seized assets are under the control of the trustee. Also, contact the financial institution that allowed the account to be drained, requesting documentation as to the basis for allowing the action to occur. These institutions have legal processes that must be followed precisely.

This particular site, as well other linked sites, provided excellent information of the procedure and actions for a Chapter 7 bankruptcy. [http://www.chapter7.me/bankruptcy-basics/process/default.aspx]
Another one is [http://www.thebankruptcysite.org/bankruptcy-process].

You must recognize and understand that bankruptcy procedures are usually not fast moving events. Your bankruptcy can be discharged, but the full execution of the seizures and demanded liquidations under your bankruptcy ruling may still have to occur to completion. It is essential for you to know what is “yours” and what is now no longer yours. By the same rules, you cannot beat the bankruptcy process to your account that you listed and that was seized, by emptying that account before a creditor does. This is illegal.

It is allowable for you, and your trusty side-kick attorney, to negotiate what is seized to be liquidated, and what is left for you. This all typically happens under the court proceedings that hopefully, eventually, lead to a discharge. Also, state laws vary in what is exempt from seizure and what is not. Here, again, your trusty hired lawyer will help insure that this separation occurs correctly.

Individuals are often fooled into thinking that all of the seizure and final liquidation has to occur before bankruptcy discharge. This is not necessarily so. In general, Chapter 7 processing usually takes about two to three months to finish completely. It often depends on the unique individual circumstances of the debtor. It starts with the debtor filing a petition that his or her debts be discharged under Chapter 7 of Title 11 of the United States Code. The actual court hearing usually takes less than ten minutes. After the hearing, the debtor will receive a notice in the mail from the court notifying them of the discharge. What has happened in between is the assigning of a trustee who manages the seizure and liquidation. The meetings with the trustee are to sort through the list of assets, deciding what is exempt and what is not. Once the trustee completes the list of assets that can be seized and liquidated, the trustee will move for bankruptcy discharge. The seizure and liquidation go on while the final paperwork and court hearing for discharge goes on. So, to summarize a bit, a debtor has to realize that what the trustee listed for seizure is no longer available to you, so do not use it or rely on it. If some asset was not on the list and yet seized, someone went outside the bounds of the bankruptcy agreement and must be rectified.

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