Before Bankruptcy: Do You Need to Change Banks?
As a Virginia Bankruptcy lawyer, I often tell my clients to “change banks.” Why?
If you have been hit with and ignored a warrant in debt, and the return date is past, you may be about to be garnished. What checking account did you use when you last paid that debt? Since they know where it is, that’s the one you can expect will be first garnished. Unless we can file your bankruptcy right away, it’s time to change.
(Changing your account number is not enough. A garnishment will hit all the accounts you have at that bank.)
You also need to change if have a loan where you bank . If you are falling behind on your second mortgage–for example–with Bank of America and you save or check with Bank of America, they can dip into your account to pay themselves. Credit Unions can also pay themselves for credit cards. Banks can’t.
What do I recommend? I like to say that the universe is full of banks. You want to go to a bank you never used before. And one you don’t owe money to.
Some people’s before bankruptcy credit is so bad they cannot open an account at most banks. I recommend TD Bank, which has a number of locations in Northern Virginia. I send TD four or five people a months, with no complaints. Many people have told me TD is their all-time favorite.
(TD is also right across the street from the bankruptcy court. They are always very nice when I need change for parking.)
Woodforest Bank, found in some Northern Virginia Walmarts, will also open an account for most people with really bad credit.
Even if they haven’t done it before, your bank, if you owe them money, can freeze your account and help themselves to what you had there the day the bankruptcy was filed.
After bankruptcy, your account is safe. Being able to keep your money safe from offsets and garnishments is one important reason people file bankruptcy in Virginia.
Here are the steps. Stop the direct deposit. Spend down the money you have in your existing account: pay bills, buy groceries, whatever. Open a new bank account. Start the direct deposit going to the new bank.
There’s a very remote danger your bankruptcy could be challenged if you transfer money from the old bank to the new one. So spend that money on real needs as quick as you can. Switch the direct deposit to the new bank.