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right to setoff by bank

can a bank empty your bank account using s.97 `right to off-set` of the bankruptcy act as a reason ???? (bankruptcy paper was signed on oct.24; bank emptied account on nov.7)

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One Response to “right to setoff by bank”

A licensed trustee said...

Yes they can. In layman’s terms the right ofg set-off means that a bank may apply money on deposit in one of your accounts against an outstanding debt in a different account that you control. For example, you may have $500 in your chequing account on the date you file for bankruptcy and owe the bank $2,000 on your Visa card. the bvank has the right to take the $500 and use it to reduce the balance on the Visa.

As arule, we tell all of our clients to open a new bank account BEFORE they file for bankruptcy or a proposal and to move all of their banking to the new account. In this way they avoid the problem of the bank seizing money when they file. If your trustee didn’t give you this advice then you might want to give them a call and ask them why they didn’t…

For people reading these blogs before they file themselves, you can use this as a pretty simple test of whether or not your trustee is experieiced in personal insolvency. If they don’t suggest that you switch banks then perhaps you should be looking for another trustee.