If you do not owe your bank any money when you file a bankruptcy, then there should be no problem with you continuing to bank with your current bank.
Consider the different ways you could owe your bank.
- Do you have a balance on an overdraft?
- Do you owe fees due to unpaid checks, etc?
- Do you have any kind of loan with the bank? (i.e. vehicle loan, business loan, personal loan, etc.)
Banks
Our clients rarely have a problem continuing to bank with their current bank when they file a bankruptcy. This also includes situations when the client owes their bank money. It would be a good idea when you file bankruptcy to not keep large amounts of money in your account for awhile until you feel secure that the bank will not take funds in your account due to a balance you owe the bank.
Credit Unions
If you owe a credit union when you file then, most likely, your bank account will be closed and any balance in your account will be applied to the debt you have with the credit union. Credit unions quite often cross-collateralize their loans. For example, if you have a credit card with a credit union and a vehicle loan and then file a Chapter 7 bankruptcy, you may need to continue paying on your credit card if you want to keep your vehicle. A Chapter 13 could also be affected by owing a credit union.
If you do owe a credit union and are about to file a bankruptcy, we usually recommend that you open up a new account at a different bank before the filing of the bankruptcy. This way you, don’t risk the credit union taking the money you have in your account.
FILING A BANKRUPTCY WITH MEDICAL DEBT
Anyone who has experienced a serious medical problem knows that the medical charges can be insurmountable. This is especially the case for families that are barely meeting their current monthly expenses. It’s nearly impossible for such a family to be able to manage thousands of dollars in medical debt. This is one of the most common reasons for a person to consider bankruptcy. Those medical debts left unpaid could eventually result in a legal judgment against you and then turn into a garnishment. The last thing that a family that is barely getting by wants, is a garnishment which will mean even less money that they will have to cover their basic household necessities. Filing a bankruptcy will protect you from any medical collections. At the end of your bankruptcy you will no longer be responsible for that debt.
If you file a bankruptcy as an individual but you are married, then your spouse will still be responsible for any debt that they owe on their own and any debt that you owe together. A joint debt that is quite often not considered is medical debt. Any medical debt incurred by the spouse that filed a bankruptcy or any medical debt of a minor child would still be the responsibility of the non-filing spouse if the medical debt was incurred while they were married. It doesn’t matter whether or not the non-filing spouse was present at the time the medical debt was incurred. For example, if a husband takes a minor child to the emergency room without the wife even knowing about it, the wife is still responsible for the debt.
Of course, if both spouses file a bankruptcy then the medical debt could no longer be collected by either of the spouses.