Can Banks Freeze Assets in a Consumer Bankruptcy?
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...