Bankruptcy and Bank Accounts

Written by, Yvette Recio, Attorney

When filing for bankruptcy, it is important to understand how your bank accounts will be reviewed and what you need to do if you do not have bank accounts.   Managing your bank accounts is a routine task necessary to keep our finances in order.  It helps us monitor our spending habits and better allocate resources. The posting to the account is automatic if you use a check or debit card creating a permanent record for future review.

Most of us do not consider that our bank accounts may be reviewed by third parties and our spending habits questioned. When you file for chapter 7, 13 or 11, the review of all your bank accounts is part of the due diligence any practitioner will require.   Most practitioners will require 6 months to a year of bank statements, depending on the type of filing. These statements will also be reviewed by trustees assigned to the case.

If you operate mostly in cash, meaning you withdraw large sums or cash checks and pay for goods and services in cash, it is important you retain all receipts evidencing the expense. This will help refresh your memory and you may be required to present the receipts for the review of a bankruptcy trustee. If you do not have a bank account, you need to have some other means of tracking your income and expenses or be able to generate an income and expense spreadsheet for your bankruptcy attorney to review.

From the moment you are considering filing for chapter 7, 13 or 11, it is important you start saving proof of income from all sources. If you get paid in cash, start a ledger documenting the income per month. If you get paid by payroll check, keep the pay stub. If you get paid by personal check, make a copy of the check before cashing and document in your ledger.

Following this simple advise will reduce the amount of homework you will have when you file.   You will also be able to give your attorney reliable numbers to assess your financial situation.   Contact Yvette Recio, attorney, for additional information regarding bankruptcy and bank accounts.

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