Filing for bankruptcy can be a daunting and complex process, and it’s natural to have concerns about your finances. Many individuals considering bankruptcy worry about losing their hard-earned savings. Please continue reading as we explore potential ways to protect your savings accounts during bankruptcy and the importance of working with a skilled New City Bankruptcy Attorney.
What Happens to Money in Savings Accounts If I File for Bankruptcy?
When you file for bankruptcy in New York, it’s important to understand that your assets become subject to the bankruptcy process. This means that the bankruptcy court will assess your assets to determine what could be used to repay your creditors. However, not all assets are treated equally, as some assets may be exempt from the bankruptcy process, meaning you can keep them. The specific exemptions vary depending on the type of bankruptcy chapter you file.
Once the bank receives notice of your bankruptcy filing, they will likely freeze your accounts to shield the funds for creditors. If you owe money to the financial institution that holds your accounts, they may use the funds in those accounts to satisfy that debt, known as a “set-off.” In most cases, you can keep your accounts if you are in good standing. However, the funds held in the account can be seized to pay debts owed to creditors.
Can I Transfer the Money?
If you are concerned about losing your savings in bankruptcy, there are several steps you can take to protect them. Contrary to popular belief, you cannot transfer all the funds out of the account before filing. This is considered fraud. Any attempt to conceal funds from the bankruptcy court or your trustee can result in the dismissal of your case or even jail time. You should note that the bankruptcy court will scrutinize your transactions to ensure all assets are accounted for, and if they suspect fraud, you can face severe consequences.
In New York, you can safeguard your savings by leveraging the state’s bankruptcy exemptions, which allow you to shield certain amounts of funds in bank accounts, typically up to $1,500, from being seized by your trustee. Keep in mind that the New York wildcare exemption allows you to protect any personal property up to a value of $1,325 if you don’t use the homestead exemption.
Another way you can protect your savings account is by consulting an experienced attorney from The Lauterbach Lw Firm, who can assess your financial situation, advise you on your options, and help you navigate the complexities of the bankruptcy process. Our legal team is prepared to help explore potential exemptions and develop a strategy to protect your assets. Connect with our firm today for more information.
