If you’ve filed for Chapter 7 bankruptcy, you case is complete and you have received your discharge of debt, you’re probably dancing on the rooftop – or at least on a countertop! That is, unless you have lingering issues such as a bank account that is mysteriously still frozen.
If your Chapter 7 bankruptcy is complete, but your bank account is still frozen, it’s a safe bet that you filed bankruptcy without the assistance of an attorney. Doing so is completely fine, but when you file bankruptcy without an attorney, you have to handle all the little bits and pieces as an attorney would. This situation usually occurs in cases where one of the petitioner’s creditors had a judgment, received a court order and levied the bank account of the debtor. After receiving service of the court order from the local sheriff, the bank froze the account.
Filing for bankruptcy comes with the automatic stay that stops all creditor activity, but the bank had not received notification of your bankruptcy unless you mail, fax, or call. Even if they do receive notification of the bankruptcy, the bank will still leave the account frozen – waiting for the sheriff or the court to order them to unfreeze the account. The same agency that originally notified the bank of the order to levy must also notify them to remove it. Notification of the bankruptcy must also be provided to the creditor who received the judgment resulting in the levy. They are then required to respond with a confirmation of your filing either through the court or directly to the sheriff. Once aware of the bankruptcy, all collection activity must stop.
There’s often a delay in the process because it can take the sheriff a while to notify the bank. They aren’t being purposefully difficult, it can pretty much be assumed in whatever area you live that the sheriff’s department is understaffed. This results in delays in processing this type of request. Eventually you’ll hear from someone or get in touch with someone at the sheriff’s department and be able to confirm receipt of the creditor’s release. (Some sheriff departments have online services you can check for case status). You’re just as likely to hear from your bank that the account has been unfrozen.
If you need assistance with a frozen account or with filing bankruptcy please get in touch with one of the experienced southern California bankruptcy attorneys at Westgate Law.