One of the most common
assets that a
Chapter 7 or
Chapter 13 bankruptcy Debtor (the person filng bankruptcy) has is a bank account.
What types of bank accounts must be listed as assets? Any account that
the Debtor's name is on (or the Debtor's spouse is on in a joint
case) in any capacity. This includes bank accounts that a Debtor may be
on that are actually for his children. This also includes accounts that
the Debtor may be listed on for 'estate planning' purposes (i.e.
when elderly parent puts him on their account to help avoid probate).
A common issue with bank accounts (and credit union accounts for that matter)
that arises in a
Chapter 7 or
Chapter 13 bankruptcy filing is when the Debtor has accounts at a bank that they
also owe money to. A bank has a security interest in the Debtor's account
at the time of filing. The bank can 'freeze' these funds and seek
to enforce this security interest to 'set off' against the loss
it will take in the ensuing bankruptcy.
It's simple enough for a perspective Debtor to open new accounts at
a new bank (or credit union) that he does
not owe money to prior to a bankruptcy filing. A wrinkle that may be overlooked
- with sometimes catastrophic consequences - is when the Debtor forgets
that they are also joint on somebody else's account at that
same bank that they owe money to. What can happen in this situation? That account
that dear old mom put the Debtor on for 'estate planning' purposes
may be subject to the same 'set off' as if it were the Debtor's
This is why it's imperative for a perspective Debtor to disclose to his
Michigan bankruptcy attorney any and all bank accounts that their name is on.