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Wells Fargo Freezes Bank Accounts

[fa icon="clock-o"] May 31, 2015 [fa icon="user"] David L. Stevens [fa icon="folder-open'] Bankruptcy, Chapter 7, News

stage coach-Wells FargoWells Fargo has initiated a policy of freezing a debtor's bank account upon the filing of a chapter 7 bankruptcy and thereafter sending notice to the trustee asking for direction on what to do with the held funds. Some courts have found that this is an improper interference with a debtor's exempt assets, but other courts have held that the policy is consistent with Bankruptcy Code requirements.

 

Application of Section 532(a)

The courts agreeing with the policy reason that section 542(a) a non-custodian has a duty to turn over estate property except where of inconsequential value to the estate (the same language used in section 554 relating to abandonment). The apparent threshold is $5,000 before Wells Fargo undertakes its peremptory freeze.

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