If you have an account at a bank you owe money to that bank can seize your deposit funds and reduce your debt under the doctrine of “setoff”. This is because funds on account are not considered your cash, but rather a debt the bank owes you. Even after bankruptcy, the bank may freeze these funds by refusing to allow a debtor to make withdrawals or pay checks. While the funds are frozen, the bank may move for relief from the bankruptcy stay to exercise its setoff rights, forever depriving the depositor of their funds. More details are available from Bankruptcy And The Frozen Bank Account?
Can The Bank Seize My Account After Filing For Bankruptcy?
Ronald J. Drescher has been practicing since 1986 in the areas of business transactions, commercial litigation, loan documentation, bankruptcy, creditors’ rights, and out-of-court workouts. His experience also includes corporate reorganizations, insolvency, business and tax planning.
