Frozen Funds: Can My Bank Freeze My Funds When I File Bankruptcy In North Carolina?

I am currently assisting a client with a situation where the bank has frozen funds in his bank account. While the laws in bankruptcy can assist in helping you regain access to the frozen funds in your account, it can be a slow and painful process. There are ways to avoid having your money frozen by your bank, but you need to consider them prior to having your North Carolina bankruptcy attorney file your bankruptcy petition.

Withdraw Your Funds

You may have a longstanding relationship with your bank. They may have treated you well in the past. Unfortunately, when it comes to bankruptcy filings many banks go into self-protection mode. By removing your funds from your accounts prior to filing bankruptcy, you eliminate this risk.

Another option would be to keep the account open but lower the balance to an amount you can stand to lose if the bank freezes your funds. My preference is to cut ties and start over with a new bank.

Circumstances Where Banks Freeze Funds

If you have a loan with the bank (vehicle, line of credit, etc.), you’ve created a creditor/debtor relationship and they are entitled to use your available funds to put toward that loan you owe them. They have been known to exercise this right when they anticipate your bankruptcy filing.

While ACH debits are not technically ‘freezing funds,’ you will find it extremely difficult to get an ACH debit discontinued, resulting in funds going to creditors you no longer have to pay if you’re filing bankruptcy—if you close the account, you’ll accomplish this immediately and with much less hassle.

If a creditor obtains a judgment against you, there is a chance the court will approve a levy on your account. The bank will cooperate in this measure and your funds will be frozen. If you plan to file bankruptcy, moving the funds to another account will buy you enough time to avoid this until you get the bankruptcy petition filed in North Carolina.

Protect Yourself And Your Family

You are going through a difficult financial time. Your top priority is not your relationship with your bank. Your top priority is providing for yourself and your family. If you have noticed odd activity by your bank or you are receiving notices from the court regarding a debt, please call me. We will put a plan together to ensure you maintain access to the money you’ve earned. 704.749.7747.