March 17th, 2009 by Questions
My bank account is currently in overdraft… is this also wiped out through bankruptcy?
Posted from: British Columbia
One Response to “overdraft”
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March 18, 2009 at 7:53 am, A licensed trustee said:
Yes, your overdraft is a debt that will be included in your bankruptcy or proposal. As a rule, we ask our clients to “switch banks” before they file to a new institution that they are not indebted to. The new account should not have an overdraft because if it does we need to notify the new bank of the bankruptcy and the overdraft will be cancelled.
A word of warning about switching banks: many banks will “hold” funds for new customers, often for as long as 5 days. You need to know your new bank’s policy so you can plan your payments accordingly. If funds are “held” and you write a cheque it will bounce and be charged a fee – be careful and you’ll be ok.