Legal Question in Bankruptcy in Texas

Is Debtor's Bank Exempt from Chap 7 Discharge of Its Claim?

My mother, a widow, fixed income from a pension and social security, 84 years old, filed chapter 7. The meeting of the creditors was held in June and the court will render its decision shortly.

Her pension and social security checks are direct deposited in her bank. She has an unsecured overdraft protection debt with the bank. The bank debits her checking account each month $25 to pay the debt. This debt was listed in the chapter 7 bankruptcy petition. The bank continues to deduct the $25 from her checking account.

She has been told that because she has her funds (pension and social security checks) deposited in the bank, the bank having access to her funds, can continue debiting her checking account for the unsecured debt even though the debt was included in the chapter 7 bankruptcy petition. The only way she can avoid this $25 monthly payment is to change banks. Is this true?


Asked on 10/01/02, 10:01 am

2 Answers from Attorneys
Andrew Nichols Law Office of Andrew B. Nichols

Re: Is Debtor's Bank Exempt from Chap 7 Discharge of Its Claim?

It is probably not true. However, I recomend for my clients who have direct deposit/drafts issues to change banks to make absolutely sure the direct drafts are stopped. I've seen too much monkey-business in this area and changing banks before the bankruptcy is filed is the best approach in my opinion. ph. (800) 303-0720

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Answered on 10/01/02, 10:44 am
Lawrence Maun Lawrence J. Maun, P.C.

Re: Is Debtor's Bank Exempt from Chap 7 Discharge of Its Claim?

The bank may have a right of offset to funds in your mothers account when she filed bankruptcy, but they get only one shot. They cannot continue to deduct. Consult the lawyer who represeted your mother in the bankruptcy. Larry Maun 713.266.2560

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Answered on 10/01/02, 3:14 pm


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