Bank Accounts & Bankruptcy

When filing for bankruptcy you will have to stop using your bankcards and chequebooks. These items should be handed over to the proper authorities regarding bankruptcy.

After the bankruptcy order has been implemented, all your bank account will be freezed by the banks themselves. You will have to obtain special instructions or agreements from the banks in order to access your accounts.

It is also not advisable to open new accounts prior to the filing for bankruptcy, for they will be frozen as well. Bank accounts and bankruptcy just don't mix.

In a bankruptcy order, all your accounts are part of your assets. Therefore, it will be retrieved by the proper authorities to your outstanding debts. A part of your account may be released to you for your necessary familial expenses or for your day-to-day living.

If the account is under joint names, it will be decided on how portion of the account will be retrieved in your name. When your account is overdrawn, the joint account holder will be required to pay back the entire amount of the money owed.It is advised that you don't pay directly to the bank unless it involves mortgage on your home.

It is not easy opening a new account after you have been officially declared bankrupt. It is imperative that you inform the bank about your bankruptcy record. The bank will have to decide whether they can grant you a new account.

Although some banks will grant new account to people who are declared bankrupt, they may impose a few limitations or restrictions to the new account holder. You also have to inform proper bankruptcy authorities on your new account.

They can claim any excessive amount in your account beyond your means of living. They can use these surplus amounts to pay off your remaining debts. If you do not cooperate with these regulations, they can intercede in your bank account.

If your holding a trust account for your child during bankruptcy, it has to have been opened in the proper way. If the trust account is under you name, the bankruptcy authorities can claim it.

You have to have proper documents or proof that the account is a trust fund for child. If you ever have taken money from this account to pay of bills, then you will have a hard time convincing the judge or trustee regarding your bankruptcy.

However, there are laws protecting these funds from creditors. You child's trust will be safe during bankruptcy because of these type of law, like The Uniform Gift To Minors act or UGTMA in the US.

You are not allowed to take money from UGTMA accounts, because this account is irrevocable. When the minor reaches the proper age, the account will now be under his authority.

Before you open new accounts, you have to be well-informed regarding bank accounts and bankruptcy. You can get advice from professional advisers. You can also seek these advices from solicitors, qualified accountants, and trustees presiding on you bankruptcy.

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