FILING CHAPTER 7 BANKRUPTCY COULD CAUSE YOUR BANK TO FREEZE YOUR BANK ACCOUNT
Bank accounts, whether checking or savings, are not automatically frozen, closed, or garnished when you file for Chapter 7 bankruptcy. However, there are certain circumstances or situations that may affect the status or amount of your bank account when filing for Chapter 7.
WHY WOULD YOUR BANK ACCOUNT BE FROZEN?
The most common reason why your credit union or bank freezes your account is because you owe them money. If you have a car loan, credit card, or a line of credit with your bank or credit union, then you should expect your checking and savings account to be frozen or temporarily unavailable after filing for a Chapter 7 bankruptcy in Oregon. The bank or credit union could also choose to freeze or close your checking or savings account if you have a negative balance. There are several ways to prevent your bank account from being frozen or closed.
REAFFIRMATION AGREEMENT: If you have a car loan with your bank or credit union, you can usually resume full use of your checking and savings account after you reaffirm your car loan. Of course, this only makes sense if you want to keep your car and are able to continue making payments on the car.
SWITCHING BANKS: Many debtors chose to open a new account at a local credit union before they file Chapter 7 bankruptcy. This allows them to keep banking even after their old bank freezes their account. Credit unions tend to have better terms than banks, and often provide interest for savings and checking accounts. Even if you do not need to switch banks, you might consider switching to a credit union if you are currently banking with a large bank, so that you can get an even better fresh start after your chapter 7 bankruptcy is complete.