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Setoffs And Bankruptcy
Banks And The Right Of Setoff
Many people are unaware that owing money to your bank can result in the bank freezing your account or deducting money from your account to cover the personal debt. In most cases, the bank does not even have to notify you before doing this. This right is known as the bank's right of setoff. State laws regarding setoff vary. In some states, you must agree to the setoff at the time that you request the loan. In other circumstances, the bank can try to get a court order allowing the setoff. Keep in mind that banks may be able to take similar action in circumstances where you have overdraft protection or a line of credit on your checking account. In order to fully understand the complicated setoff laws, it is in your best interest to hire a bankruptcy attorney.
Why You Should Hire A Bankruptcy Attorney
During times of financial difficulty, many people falsely believe that they can save money by handling legal matters themselves. Not only will handling a legal matter yourself require a great deal of time and effort, you might make some bad decisions that end up costing you more money in the long run. Bankruptcy attorneys can advise you as to whether filing for bankruptcy is in your best interest. Bankruptcies are time-sensitive matters that relate to your recent financial history. An experienced attorney can analyze that history and make recommendations as to the best course of action.
How Bankruptcy Affects Setoff
In most states that allow setoff, that right may be retained, even if the indebted party declares bankruptcy. Filing bankruptcy institutes an automatic stay that limits debt collection by creditors, but banks can get around this stay by asking the court for permission to take your funds. In a complicated area of law such as bankruptcy, having an attorney on your side is a huge benefit. Your bankruptcy will not be final until your discharge date, and many problems can arise between the day you file and the date you are discharged. Your financial transactions just before declaring bankruptcy may even be voided by the bankruptcy trustee. In these circumstances, you need a knowledgeable and experienced bankruptcy attorney to fight for your rights. Contact a bankruptcy lawyer today to discuss whether bankruptcy is the best option for you.