Question: Once you’ve met with a trustee and you’ve signed all the documents for bankruptcy, do creditors have a certain time period whereby they can still take money out of your bank accounts to cover credit card debts before creditors are ’stayed’? If so, how much time do they have?
Thank you.
Answer: Technically, as soon as you sign the paperwork the trustee will electronically file your bankruptcy with the Office of the Superintendent of Bankruptcy, and all creditors are “stayed”, meaning they are not allowed to take money out of your bank account without permission.
In practice, the trustee must then mail or fax the bankruptcy paperwork to each creditor, so it may be a week or more before the creditors realizes that you are bankrupt.
Therefore, in all cases we recommend that before you file bankruptcy you open a new bank account at a new bank (one where you don’t owe money). You then close your old bank account. Since your old bank account no longer has any money in it, it is impossible for a creditor to take money out of an account they don’t know exists, provided you don’t tell them about your new bank account.
