If you’re getting ready to file for bankruptcy, you may be wondering what will happen to your various bank accounts, and particularly any savings or retirement funds that you may have. While most people know that it is a very bad idea to run up additional debt immediately before filing for bankruptcy, there is less known as to what you will be able to keep.

Putting money in savings may seem like a good idea at first, as once you’ve filed for bankruptcy it will generally preclude your creditors from bothering you. But that doesn’t mean that what is in your bank accounts is exempt from being used to satisfy your debts. Each state has its own exemptions, and the trustee that is assigned to your case will be responsible for distributing any funds that exceed whatever exemption amount applies. You also face the additional possibility that your bank will freeze your funds, making it impossible for you to pay more bills as they come in. Though your bankruptcy trustee will be able to address this, if your balance is kept low then you don’t have to worry about the exemptions and will be able to keep paying your bills and accessing some cash.

Another consideration is whether the bank where you have a savings account is one of your creditors. If you have taken out a loan then you probably agreed to what is known as a “set off” that allows them to take funds out of your other accounts in order to satisfy your debts, even if as a creditor they have been told that they can’t pursue collections because of your bankruptcy status. Adding to savings would likely see those funds applied to your balance as soon as the bank is notified of your filing. The same may be true of utility companies and of automatic payments that you have previously authorized.

Some of your savings accounts will be safe from your creditors. This is particularly true of your retirement savings and pension accounts, but you should be cautious about moving money around in a way that could appear to be fraudulent or deceptive in the eyes of the bankruptcy court. For assistance in navigating your debt and pursuing bankruptcy in the way most beneficial to you, contact our experienced attorneys today to discuss your situation.