Debtor's Name On Parent's Wells Fargo Bank Account Is Bank...

Two things you don’t want if you are filing Chapter 7 bankruptcy. One is a bank account at Wells Fargo, and the other is your name on a joint account with a family member who is not involved in your bankruptcy. Wells Fargo accounts are a problem because, as I previously wrote on this blog, Wells Fargo will freeze all bank accounts with your name on it even if the account has only exempt assets, such as social security, annuity proceeds, or head of household exempt wages. We warn all bankruptcy clients about Wells Fargo, and we suggest moving exempt money to another bank before filing bankruptcy.  Joint accounts are a problem because the account may be attacked by the trustee even if all money in the account was deposited by the non-debtor family member.

This past week I dealt with a client who encountered both problems simultaneously. The client had already filed Chapter 7. Her mother had an account at Wells Fargo where the money had deposited her social security checks. The mother put the daughter”s (debtor’s) name on the account for estate planning purposes. The debtor did not know her mother added her name to the account, so the debtor did not list the account on her bankruptcy schedules. Again, the debtor had never deposited any money in the account.

You probably have guessed what happened. Wells Fargo froze the account because it had the debtor’s name on the title. The mother cannot get access to her social security money which she needs to pay her rent and buy food. Wells Fargo refuses to release the account until the bankruptcy trustee writes a letter stating he will not claim the account as part of the debtor’s bankruptcy. The trustee suspects the debtor intentionally omitted the account from the bankruptcy schedules inasmuch as the debtor is required to list all accounts with her name on them. The mother can’t understand why she can’t get her social security. It is a big mess.