If you are filing for consumer bankruptcy protection under Chapter 7 of the U.S. Bankruptcy Code, you may already know that your ability to open new credit card and loan accounts is severely restricted. You should also be aware that filing for bankruptcy may hinder your ability to open a checking account in some circumstances.
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You do not have a right to a checking account. A bank may exercise its discretion when determining whether it will grant you privileges to open a checking account. The impact of banks restricting some consumers' banking opportunities based on their history has led to a phenomenon known as underbanking. According to the Federal Deposit Insurance Corporation, commonly known as FDIC, as much as 10 percent of U.S. families are affected by underbanking and are unable to obtain essential financial services, such as checking or savings accounts.
When determining whether to offer you banking privileges, a bank may review a report on your banking history maintained by a private company called ChexSystems. A ChexSystems report shows whether you have overdrawn your account by bouncing checks or engaged in transactions that caused a bank to lose money. If your Chapter 7 bankruptcy discharged bank fees or other debts that you owed to a banking institution, your ChexSystems report may hinder your ability to open a new account.
Fair Credit Reporting
You have the right to request a free copy of your consumer report from ChexSystems once a year so you can determine whether any negative information has been placed on your record. You also have the right, under the Fair and Accurate Credit Transactions Act, to place a notation in your report disputing or explaining any derogatory reporting made by a bank.
Opening a New Account
If previous requests to open a checking account were denied due to your financial history, you still have options to repair your banking history and open a checking account. For example, you could talk with a small local bank or a credit union. These institutions may be more willing to take a risk on your account than a large national bank. You may also be able to open a checking account with a bad credit and banking history if you previously opened a savings account with the bank. Maintaining funds at the bank and demonstrating responsible use of your accounts may encourage the bank to extend your deposit privileges to a checking account.