If you have decided to take the step of filing for either Chapter 7 or Chapter 13 bankruptcy in Central New York, you need to know how to prepare for bankruptcy. There are specific steps you need to take throughout this process, especially when it comes to preparing for what will happen after you have officially filed.
At Grady BK, PLLC, our goal is to provide our clients with the compassionate guidance they need as they navigate the process of bankruptcy. We understand how overwhelming this process can be, which is why we will work with you one-on-one to find the right bankruptcy option for your situation. In this article, we will be discussing how to prepare for Chapter 7 and Chapter 13 bankruptcy, specifically how to prepare your bank accounts. For further assistance with your bankruptcy case, call our office today to speak with a compassionate bankruptcy attorney.
What Happens to Bank Accounts in Bankruptcy?
You will need to know what happens to your bank accounts in bankruptcy, whether you are filing for Chapter 7 or Chapter 13 bankruptcy. With both of these options, there are bankruptcy exemptions that protect certain assets from creditors. These exemptions usually apply to things that are considered to be essential to meet your basic needs or to function normally, such as your home, your vehicle, or the tools of your trade.
You can usually keep your bank account after bankruptcy, but this will, of course, depend on each individual’s situation. Credit unions will usually close your accounts if you owe them money.
Something to keep in mind is that your bank accounts may not be included in the bankruptcy exemptions. If that is the case, you will want to prepare them before you file for bankruptcy to reduce the impact of this on your situation.
Something that New York residents should know about is the New York’s Exempt Income Protection Act, which can help protect certain funds in deposit accounts from creditors. One example of this is direct deposit or electronic payments from certain statutory exempt funds going into deposit accounts. For instance, if you are receiving Social Security payments to a deposit account, this may be protected under New York’s Exempt Income Protection Act.
However, there is a specific amount set that your funds can reach and still be protected from creditors. As of April 1, 2024, this amount was increased to $3425, so if your deposit account has more than this amount, you could lose the additional funds.
Preparing Your Bank Accounts Before Filing For Bankruptcy
Now that you know how bankruptcy impacts your bank accounts, you should begin preparing for bankruptcy. Although how you prepare your bank accounts for bankruptcy will look different for each individual case, there are certain steps that you may need to take.
It is highly recommended that you take the additional step of hiring a bankruptcy attorney in New York who can help you throughout this process.
Protect Funds
Before you file for bankruptcy, you need to understand what exemptions you may qualify for so that you know what funds you will be left with. An attorney can help you examine your situation to identify these exemptions so that you have a better idea of what your financial situation will look like after bankruptcy.
If you qualify for any bank account exemptions, you need to ensure you protect your funds in those accounts by meeting the exemption limits. If you have too much in your account, you can use the additional funds to pay off certain bills or debts before you file for bankruptcy. If you do not do this and you have a balance above the exemption amount, you may lose it to your creditors.
Prepare For Account Freezes
It is not uncommon for financial institutions to place a freeze on your account once they become aware that you have filed for bankruptcy. This can limit your ability to access the funds you may need for your basic living expenses. A bankruptcy attorney can help you request that the freeze be lifted, but this can take some time.
An attorney will also know what banks would do this and prepare you for this before the bankruptcy is filed.
Stop Automatic Payments
If you have any automatic payments to creditors that you are wiping away in the bankruptcy, you will want to stop these payments before you file for bankruptcy. Doing this will ensure you have the funds you need for your basic living expenses, whether you are filing for Chapter 7 or Chapter 13 bankruptcy.
If you aren’t able to stop these payments from going through before you file, you can also notify your creditors directly. Once creditors are aware that you are going to file for bankruptcy, they can stop any automatic charges, which may be the better option if your automatic payments will go through before your creditors receive the court’s bankruptcy notice.
New York’s Top Compassionate Bankruptcy Attorney
Filing for bankruptcy in Central New York can feel like an overwhelming process, which is why breaking it down into actionable steps can help you proceed with greater peace of mind. At Grady BK, PLLC, we will help you with the entire bankruptcy process, including preparing to file for bankruptcy and navigating the after effects of bankruptcy. Having a Central New York bankruptcy attorney on your side will equip you with the knowledge you need to proceed with confidence as you begin this process.
At Grady BK, PLLC, we understand the challenges our clients face as they start the bankruptcy process, which is why we focus on personalized assistance so that you feel heard and seen. We are here to answer all of your questions so that you know how to prepare for bankruptcy and understand what happens after you file.
Contact us today at 315-299-9005 to discuss your financial situation with a bankruptcy attorney. Our team at Grady BK, PLLC, is ready to provide you with the legal assistance you need as you begin getting ready to file for Chapter 7 or Chapter 13.
