Does Chapter 7 Bankruptcy Limit the Ability to Open a New Checking Account?

By Kevin Owen

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.

Bank Discretion

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.

Considerations

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.

Ready to start your LLC? Start an LLC Online Now

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.

Ready to start your LLC? Start an LLC Online Now
Negative Effects of Chapter 13 Bankruptcy for an Applicant
 

References

Resources

Related articles

Can a Bank Repo Your Car After You Retain a Lawyer for Bankruptcy?

Repossession and bankruptcy are ugly words for car owners. Both indicate that your finances are no longer under your personal control. While declaring bankruptcy is a remedy of last resort, it can provide substantial relief -- and under some circumstances, help avert repossession of your car. While the simple act of retaining a bankruptcy attorney won't foil the repo man, you may have options to remedy the situation.

Does a Name Change Affect an Employee Background Check?

Whether you have divorced, married or completed a voluntary name change, a background check will still show any criminal convictions, civil lawsuits, bankruptcies and job changes regardless of your current name. Thus, even though you may have legal or professional records listed under a previous name, your credit and legal history will still be available to employers unless the information has been expunged or sealed from official record searches.

Can a Power of Attorney Have a Debit Card?

A power of attorney is a legal document you can create to name another person to act in your place. Powers of attorney are both helpful and dangerous, depending on the integrity of the person named as your agent. A general power of attorney confers broad powers, including the right to access bank accounts with debit cards.

LLCs, Corporations, Patents, Attorney Help LLCs

Related articles

Will a Post-Bankruptcy Car Payoff Show on My Credit Report?

If you are like most debtors filing for bankruptcy, you are behind on your rent, credit card bills and car payments. ...

Who Is a Good Candidate for Bankruptcy?

If you are facing debts that would take more than five years to pay off, have assets at risk such as a house facing ...

Can You File Your Utility Bills in Bankruptcy?

If you are filing for bankruptcy, you might be facing foreclosure, vehicle repossession and having your lights shut ...

Can I File Bankruptcy if I'm Not Late on My Payments?

If a financial storm is brewing, you have the option to file for bankruptcy protection. The federal bankruptcy code ...

Browse by category
Ready to Begin? GET STARTED