How to keep your Bank Account funds safe during bankruptcy
By: Mahnoor
Bankruptcy is a legal proceeding initiated when a person or business is unable to repay outstanding debts or obligations. It offers a fresh start for people who can no longer afford to pay their bills. The bankruptcy process begins with a petition filed by the debtor, which is most common, or on behalf of creditors, which is less common.
How Bankruptcy Works?
Bankruptcy offers an individual a chance to start fresh business by forgiving debts that they can’t pay. Meanwhile, creditors have a chance to get some repayment based on the individual’s or business assets available for settlement. All Bankruptcy cases in the United States go through federal courts. A bankruptcy judge makes decisions, including whether a debtor is eligible to file and whether they should be discharged of their debts.
Historical Perspective of Bankruptcy In US
Bankruptcy in the United States had a dynamic history over the past 100 years. Bankruptcy filings in the first half of the 20th century averaged 0.15 per 1,000 people and grew at an average annual rate of 2.4% Bankruptcy began to increase during the 1960s and have grown dramatically since 1980. Article I, Section 8, of the United States Constitution authorizes Congress to enact “uniform Laws on the subject of Bankruptcies.” Under this grant of authority, Congress enacted the “Bankruptcy Code” in 1978.
Also, we can see here are the most notable cities to declare bankruptcy in United States. California, Florida, Georgia Illinois, New York. After research there are 90 bankruptcy districts across the country and each state has one or more district.
How to Exempt Deposit Accounts in Bankruptcy?
Each state has a different set of bankruptcy exemptions, so, keeping our bank accounts protection will depend on where we live, the value of the funds in the account, and the exemptions available to you. When reviewing United States’ exemption, it is necessary to look for an exemption that covers the following aspects:
- Cash
- A deposit account generally
- A specific type of account
Protection of bank account funds is a priority for most of the people. Bankruptcy can affect your cash or bank account deposit. It depends on whether a bankruptcy exemption protects the money and whether we can do some prebankruptcy planning to protect non-exempt funds. In bankruptcy, we can protect “exempt” property. If an exemption doesn’t cover part of our cash or bank account deposits, we might still be able to protect some or all of these funds by some careful pre-bankruptcy planning.
Protection of Bank Account Funds by Spending Money
Here is the method by which You can always use your funds to purchase necessary things such as food, housing, clothing and medical care. If you’re worried about losing money because you can’t exempt it, spend it before filing for bankruptcy. Just be sure to keep good records unless the bankruptcy trustee questions your actions. While bankruptcy law allows you to convert non-exempt property into exempt property if you are acting in “good faith,” it does not allow you to attempt to delay, or defraud creditors. You should tread very carefully if you want to convert bank account funds to exempt property.
When converting cash or bank accounts to other property before bankruptcy, avoid overly aggressive tactics. When in doubt, consult with an experienced bankruptcy attorney. Local attorneys often have a good sense as to what your local court will consider legitimate pre-bankruptcy planning tactics and what will get you into
trouble.
In the end, you should speak with an attorney to get a better idea of the best way to rectify your conditions. A bankruptcy attorney can help resolve questions and enable you to settle your claims, get back on your feet, and start living the way you deserve