Oak Park Real Estate & Estate Planning Blog

Most Chicagoans who file for consumer bankruptcy assume that, once their debts have been discharged, they won’t have to worry about seeing those debts on their credit reports, or, worse yet, they won’t have to worry about being contacted by debt collectors about lingering balances that have been discharged in bankruptcy. However, according to a recent article in The Fiscal Times , that is exactly what is happening to many consumers. There is currently no strict law “saying that, when a consumer satisfies a debt, the bank actually has to led credit reporting agencies know about it.” Because it is not a hard and fast rule, “debts that have been discharged in bankruptcy can longer on credit reports for as many as ten years, and some of these completed debts have even been resold to debt collectors.” In response, a Democrat on the Senate Banking Committee has submitted legislation that would require banks to contact credit-reporting agencies when debts are satisfied. ...

If you file for personal bankruptcy , can your bank freeze assets in your account to ensure they are there to repay your creditors? That is a question that big banks like Wells Fargo have been dealing with across the country, and a recent decision on the east coast held in the consumer’s favor. According to an article in the New York Post , after several victories for Wells Fargo in other bankruptcy courts, Bankruptcy Court Judge Cecilia G. Morris held that Wells Fargo cannot freeze a debtor’s assets and control access to them. Banks Freeze Your Funds to Preserve Them for the Bankruptcy Estate Before we can think carefully about the significance of the recent bankruptcy court decision that went against Wells Fargo, it is important to understand why the bank would freeze a debtor’s assets in the first place. In general, there are two reasons a bank might freeze a debtor’s assets when she files for Chapter 7 bankruptcy : 1) the bank wants to protect the money because the d...