Does the automatic stay provisions of the Bankruptcy Code protect money in the debtors bank, or is it seized by the court?
The debtors money in the bank may or may not be taken by the trustee. This entirely depends on the bankruptcy exemptions claimed. Your exemptions may be either federal or state. Most ordinary debtor’s bank accounts should be exempted, but you must consult your attorney about this issue. Ordinarily, the trustee is the only party that can seize your account once you have filed your bankruptcy case with the court. A bankruptcy filing is also a great way to stop a creditor from seizing a debtors bank account. Quite often, a creditor will file a writ of execution that seizes all of the debtors money. Once the debtors bank account is frozen, then the creditor will have to file an application for the court to turn over these monies to the creditor. A bankruptcy filing will freeze this process, and the creditor will have to release the freeze, and the debtor can get back his much needed monies. Most of the time, the debtor will be able to have sufficient exemptions to keep their bank accounts.
