Hello Yesner Law Podcast listeners. This episode is all about Wells Fargo and Bankruptcy. I wrote a blog about this topic below. For this week's episode, I simply read the blog post because I think the content is still good and accurate. I hope you enjoy. If you have questions or ideas for another episode, please contact me at Shawn@yesnerlaw.com or www.YesnerLaw.com.
Each night, as we sleep, Wells Fargo combs the Federal electronic database of all new bankruptcy filings looking for a customer that filed Chapter 7 bankruptcy. When that happens, WF freezes the clients checking and savings accounts, thus denying the depositor access to his money.
The apparent authority for Wells Fargo to do this comes from a United State Supreme Court Case, Citizens Bank of Maryland v. Strumpf, 516 U.S. 16 (1995). In that case, the Supreme Court ruled that a deposit account is "nothing more or less than a promise to pay, from the bank to the depositor" and the bank's "temporary refusal to pay was neither a taking of possession of ... property nor an exercising of control over it, but merely a refusal to perform its promise." Accordingly, the Court ruled that the freeze was allowed and did not sanction the bank for its conduct.
Wells Fargo banking customers who live in the Tampa Bay Area and other areas comprising the Middle District of Florida will have to do some pre-bankruptcy planning. The most logical strategy is to move the money from a Wells Fargo bank account to another bank (as of the writing of this article, Wells Fargo is the only bank that imposes this account hold.) Another possible strategy is to remove sufficient case funds to cover regular expenses until such time as the Chapter 7 Trustee has an opportunity to review the schedules and send notice to Wells Fargo that the hold can be removed. Although this process normally takes a few days, it could take up to 30 days or more. Both of these strategies will have an impact on a debtor's bankruptcy petition and must be disclosed within the schedules. Thus having experienced legal counsel is a necessity when making a determination whether bankruptcy is the best option.
... or we could try to get Wells Fargo to change their policies ...