If you are concerned about your trustee checking your bank accounts such as your personal bank accounts and your business accounts, continue reading to discover in-depth information about the powers that your trustee will have, when you file for Chapter 13. This valuable information should alleviate some of your fears when it comes to filing for Chapter 13 as a way of paying off your debts and taking back control of your finances.
Does Chapter 13 Trustee Check Your Bank Account?
Yes, it's highly likely that your appointed trustee will check both your personal bank accounts and any business-related bank accounts which you may have under your name. As your trustee will have the authority to make your mandated secured loan payments throughout the duration of your bankruptcy and will have access to all of your financial information and bank accounts.
There's no reason to worry about a trustee having access to your bank accounts as the only changes which they make is to use the money in your accounts in order to pay for your secured loan payments. That you have already outlined in your 3-5 year bankruptcy plan. For example, your trustee will be in charge of ensuring that you make your mortgage repayments. Which will help you to keep your home safe from foreclosure, which may be the primary reason why you opted to file for Chapter 13. It's worth noting that most individuals who file for Chapter 13, rather than Chapter 7 are looking to protect their key assets such as their primary property.
How Often Your Trustee Will Check Your Bank Accounts
Your trustee will periodically check your bank accounts to ensure that you still have enough cash available in order to make your scheduled loan repayments, stipulated by the terms of your bankruptcy. The second reason why your trustee may choose to take a glimpse at your finances and superficially your bank accounts is to check to see that you don't have any assets which you may be trying to hide from the bankruptcy court. That should be used to pay off some of your debts.
If your trustee discovers that you've tried to conceal funds from the bankruptcy court, these funds may be seized to pay off some of your debts. So it's not a wise idea to try and conceal any funds which you have not revealed to the bankruptcy court in your bank accounts. For example, if you entrust a family member to take care of some of your funds until your bankruptcy has been filed and then you ask your family member to transfer these funds back to you, during your bankruptcy, these funds are likely to be seized by your trustee. During their periodic audits of your personal and business-related bank accounts.
Your Rights Over The Funds In Your Bank Account
As long as you leave enough funds in your chosen account for your trustee to pay your scheduled loan repayments, on time, you will be able to use the rest of the money which you earn in any way you choose. For example, you will be able to use the disposable income which you have left over after paying your bankruptcy payments to plan a local or international vacation. Contrary to popular belief filing for bankruptcy will not prevent you from traveling overseas. You'll even be able to use the money in your bank account to start a business. In order to earn more money faster, so that when you come out of bankruptcy, you will have a sustainable form of income that will help you pay off any future debts which you may require.
How To Ensure That Your Additional Funds Are Not Seized
If you don't want your trustee to mistake funds that you are allowed to keep as funds that you're trying to hide from the court, it's important that you're completely transparent when it comes to revealing all of your finances. It's worth noting that during the process of filing for Chapter 13 you will be required to reveal all of your financial statements. For example, you'll need to reveal the current state of each of your bank accounts, your state and federal tax returns for the past four years, and documents that are associated with any investments which you may currently hold.
If you are completely transparent about the state of your finances and your income and have been allowed to keep some of the money which you earn each month, your trustee will be made aware of this fact. So they won't seize this money in order to pay for your debts and you'll be free to spend these funds in any way you choose.
Opening A New Bank Account
You can also open a new bank account once you have filed for bankruptcy. Just keep in mind that it may be easier to set up a new savings account, instead of a checking account. As if you try to open up a checking account with a new bank, they are likely to check your credit score in advance which may have been adversely affected by your decision to file for Chapter 13. Whereas most banks will not perform a credit check if you simply want to open up a new bank account. Do keep in mind that if you choose to open up a new bank account, you will need to inform your trustee about your decision and to provide them with access to your account. So that they'll be able to continue paying your loan repayments on your behalf.
While your trustee will most likely periodically check all of your financial accounts such as your bank accounts, in order to ensure that you have enough money to continue making your bankruptcy payments, they are not permitted to touch any of your funds, other than the funds which are allocated for your secured loan repayments. The only exception is if you have hidden funds from the court, which should be used to pay some of your debts.