BANKRUPTCY AND OFFSET/SETOFF

BANKRUPTCY MAY SAVE YOUR BANK ACCOUNT

One of the worse things that can happen to you is for your bank account to be suddenly drained of cash.  This happens because your bank has the right of offset.   What this means is that anytime your bank feels threatened that it may not get paid the money owed to it, it can take the money out of your account.

The first rule when you begin having financial troubles is to make sure that the bank you have your money in is not one you also owe money for a debt.  This includes overdraft protections or any other type of debt.  The friendly banker that you meet and see all the time is not the one who makes the decision to use the right of offset.  Someone in a back room will make the decision to do this to you.   Unlike most other garnishments, the only limit to the amount the bank can take is that the bank cannot take more than you owe.
If you are filing bankruptcy, the money that comes into your account after the date of filing cannot be seized by the bank.  Only money in the bank on the day that you file can be taken.   Be careful when trusting a bank not to do this.  I have been told many times that “my bank would never do that”.   Too often, debtors have told me that they should have listened to me.

Even if the bank does not take your money, it is still unlikely that it will ever want to do business with you in the future.  A credit report can only report that a creditor lost money for 7-10 years.  An in-house report is not required to ever be deleted by the bank for its internal use.

About Nathan Davis, Esquire

Born in Charleston, South Carolina, Nathan Davis has been practicing law for many years. Mr. Davis has a wide variety of experiences having practiced domestic relations, criminal law, social security law having also practiced collection law in the past. This knowledge is helpful when someone needs to restart their financial life. The practice is now primarily bankruptcy and debtor representation work, but, Mr. Davis continues to also practice real estate law, trusts and estates and a general litigation practice. I believe that the most important part of representation is trying to leave you better off when the case is finished than when you started. Although I will do as my client directs, I will always tell you if I think that you are making a mistake. Bankruptcy is about a "fresh start". If you do not make changes in what you are doing, you will be doing what you are doing now in the future. There is no shame in bankruptcy or other steps that you may take to start your life over. Too often, people worry more about things than about themselves, their family or their future.
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