Filing for bankruptcy can devastate your credit score and render you unattractive to lenders and retail financial institutions. You're probably aware that you'll be unable to secure traditional forms of credit like credit cards and business lines of credit while your debts are being discharged. Unfortunately, it's likely that you'll also be prevented from performing a wide range of other financial activities during the lengthy bankruptcy process. Some of these constraints may last for years following the final discharge of your debts.
One of the most onerous bankruptcy-related restrictions to which you'll be subjected involves the opening of new bank accounts. If you have a previous bankruptcy filing on your record, some major banks may refuse to honor your request for a new checking or savings account. As banks tend to consider applications for new accounts on a case-by-case basis, there are few written rules that govern these restrictions. In general, financial institutions are more receptive to prospective clients who can demonstrate stable incomes and solid credit. Banks tend to be less receptive to prospective clients who have written bad checks or exceeded their accounts' overdraft limits in the past.
Banks also tend to avoid folks who remain mired in the bankruptcy process. If you need to open a bank account while your bankruptcy case is active, your options may be limited.
To avoid financial disruption during the discharge of your debts, be sure to exclude at least one of your existing deposit accounts from your bankruptcy filing. Most states permit filers to shield small amounts of cash or cash equivalents from their creditors. Even if you have a stable income, you'll need a solid savings cushion to deal with any unexpected expenses that arise during the course of your bankruptcy.
If you can't avoid including all of your deposit accounts in your filing, you may have to cash your paychecks for the foreseeable future. Once your bankruptcy filing becomes official, you'll be barred from opening an account with any financial institution to which you owe money. In addition, your current accounts may be frozen and used to settle any outstanding debts.
You can avoid losing control of the cash in your existing deposit accounts by opening a new account with a bank or credit union to which you've never owed money. Transfer some funds there immediately prior to declaring bankruptcy and remember to leave it out of your filing.