Can I keep my bank accounts if I file bankruptcy?

Yes, you can keep your bank accounts, except there are a few things to think about first. As I explained in an earlier post about bankruptcy “exemptions”, folks filing bankruptcy in Pennsylvania can keep property up to certain dollar limits. Bank account funds fall within the “wild card exemption”, which is the exemption used to protect any and all property, as long as you haven’t used it all to protect your home. The wild card exemption for an individual is up to $11,200 currently.

Here’s an example. Let’s say that John Doe wants to file bankruptcy in Pennsylvania. He owns a house worth $100,000, but it has a mortgage balance of $95,000. He has two 10-year-old cars, both of which are paid off, and both of which are worth $3,000. He just got paid, and his paycheck was deposited into his bank account which now has a balance of $1,600. Can he protect all of this property? Absolutely. He can protect his home, which is well below the “homestead” exemption amount of $20,200. He can protect his first vehicle with the motor vehicle exemption amount of $3,250. And he can protect his second vehicle and his bank account, both using the “wild card” exemption.

Be careful about your bank accounts in one way however. Make sure that you don’t owe your bank any money on any loans or credit cards. Most people who decide to file bankruptcy will stop paying the credit cards and personal loans that they intend to discharge (wipe out) in their bankruptcy filing. Let’s say that you do your banking at First National Bank of Main Street, and you have a personal loan with them in addition. That bank may have a right of “set-off”, which means that the bank can invade the bank account to obtain its monthly payment on the personal loan. You might suddenly have an unexpectedly low balance, and you might have a raft of bad checks. Just be careful and plan accordingly. Obviously, you’ll need to seek appropriate legal advice.

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