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How bankruptcy impacts your savings and checking accounts

Numerous people throughout Mississippi file for bankruptcy every year. Many of their stories remain untold because most of the time, bankruptcies with larger companies end up making headlines. For example, three Mississippi hospitals, along with a parent company in Tennessee, have had to file for bankruptcy recently, citing over $70 million in debts. 

In the event you ever need to file for bankruptcy, you will undoubtedly have some questions. It is natural to feel concerned, particularly about how this action will affect your bank accounts. There may still be quite a bit of money in your checking and savings accounts, and you can rest assured that money will remain safe. 

There is a chance your bank may not hear about the bankruptcy

You should not experience any issues banking with the same institution as long as your debt did not come from the bank. If you defaulted on a loan or racked up massive amounts of credit card debt from a bank card, then your bank will receive a notice from the court about you filing for bankruptcy. When this occurs, the bank will most often "set off" any accounts you have with it. This is legal because those funds are already within the bank's possession. It is vital to remember that not all banks do this. This is why you need to inform your lawyer of all bank accounts you have so you can take action to try to protect all funds. 

However, when your debt did not come from your bank, there is a chance the institution will not even hear about your bankruptcy. In this case, no notice will go out to your bank. Additionally, customers who only have simple checking and savings accounts typically do not receive credit checks from the bank. You will be able to retain all your bank accounts and the money in them. 

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