I have had a rash of people coming to see me recently that have had their bank accounts frozen after being sued. If someone you owe money to sues you and wins, they can freeze your bank account without giving you any warning. Under Pennsylvania law, the bank only has to allow you to withdraw $300.00. The rest of the money will be held for and, eventually, seized by the creditor that froze the account. Obviously, $300.00 isn’t enough to buy groceries for the month, cover rent or make your car payment. Also, the freeze doesn’t just apply to the funds in the account at the time the freeze is put in place. Any money that goes into the account afterward will also be frozen until there is enough money frozen to pay off the creditor or the freeze is lifted. Almost everyone has direct deposit these days, which means that paycheck after paycheck could be frozen in the account, preventing you from having the money you need to live.
The good news is that filing a bankruptcy releases the hold on your account and allows you to reclaim all of your money. The bad news is that waiting until your account is frozen makes it much more difficult to get the money together to file the bankruptcy and it usually takes approximately two weeks for your account to be released. If you wait to file a bankruptcy until your account is frozen, you will be forced to borrow money from a friend or family member to file the bankruptcy and have money to live on until your account is released. Also, you will have a limited amount of time to file the bankruptcy before the money is removed from the account and given to the creditor. Once that happens, the bankruptcy cannot help reclaim that money.
Don’t wait until your account is frozen. If you have fallen behind in paying a debt or are being sued, give Steidl & Steinberg a call. We can discuss your options and help you file a bankruptcy before a creditor has the chance to freeze your bank account. Don’t be left out in the cold.