Bankruptcy Errors to Avoid - Part 3 - The Pain Of Not Changing Banks

A great number of us use our bank for everything: paychecks are on direct deposit; pay credit cards, mortgage payments and utilities bills electronically.  Some bills are setup for automatic payment and others are scheduled manually.  We are familiar with on-line banking;  an understanding of how our bank’s online software works and have mastered its applications. The thought of changing how we use our bank account or worse the thought of actually changing banks is an enormous pain.  Sometimes, in preparing to file your bankruptcy it is often necessary.
Cash on hand and cash in the bank is often non-exempt (not excused).  In limited circumstances when exempt it will be for a limited amount of money claimed on your bankruptcy schedules.  In a Chapter 7 case, any excess cash (the difference between what's in the bank and the exemption amount) will end up in the hands of the Chapter 7 Trustee unless you can amend your bankruptcy schedules to claim the additional amount as exempt (excused), which often is not the case.  In a Chapter 13 case, the amount of non-exempt cash in the bank may increase your Chapter 13 monthly payments. 
The amount of cash in banks gets listed on your bankruptcy schedules at the time your bankruptcy is filed, without considering outstanding checks or incoming paychecks, social security checks or the like.  Therefore, it is important all outstanding checks have cleared the bank before your Bankruptcy case is filed. It's routine to adjust the amount listed on your bankruptcy schedules before your case is filed.
Well the foregoing is tough enough to keep straight, what's worse is having to change banks.  Opening a new account at a different bank and having to learn the new bank’s system, redirect your automatic deposits and set up automatic payments is without question time consuming   and disruptive.  The two situations that require a person about to file bankruptcy to change banks are: 1. If you owe your bank money (for example: an automobile loan, furniture loan, etc.).  If that's the case, there is every reason to believe your bank will grab the money in your account and apply it to the debt leaving a person with checks bouncing and no money to pay ordinary living expenses.  2.  Depends on a particular bank’s policy when one of it's customers files bankruptcy.  There are banks that will freeze your account when they discover  you have filed bankruptcy, which leads to checks bouncing and bank service charges for each NSF check.  Assuming you are entitled to keep the cash, some banks take up to 10 working days to free up your account.