Money in bank account
I currently have money in my bank account to pay my mortgage due in a few days and the $200 downpayment for the Licensed Insolvency Trustee. That’s all I have, no cash on hand.
If I file, will they take the money if I leave it in the bank and I have to come up with more money? Should I pay my mortage first and take out the money to pay the trustee?
Whenever a person files bankruptcy (or a proposal) we recommend that they open a new bank account at a financial institution that they have not dealt with in the past. We instruct individuals to do this BEFORE they file.
The reasons are fairly straightforward – if you owe money to the bank that you regularly deal with and you file bankruptcy (or a proposal) the bank may seize all of the funds that you have in your account. Whether or not they are legally permitted to do this may be debatable, but once they’ve taken the money it can be challenging to have it returned. In addition, since you won’t be warned that they are going to take the funds you will probably bounce a payment or two, or worse, go to an ATM to withdraw cash for groceries only to find that the money is gone.
It is of course up to you, but the inconvenience of switching bank accounts yourself is less work than trying to sort things out if your current bank seizes all of the money you have in your account.
This is a new bank account that I opened thanks to such advice. The only money owed to this bank is a small mortgage arranged privately through my realtor. I will continue to make payments on this mortage since it is a secured debt and the mortgage is not in default.
Should I open another account in another bank? Doesn’t the Trustee take all my money in any bank accounts?