The court-appointed trustee in charge of your bankruptcy has broad powers to review all of your financial records, including your bank accounts, while your bankruptcy is in process. The trustee may choose to check your bank accounts whenever he feels a need, though there are several key points in your bankruptcy when the accounts will definitely be under review.
Read More: What Is a Partial Bankruptcy?
Reviewing Financial Documents
The trustee in charge of your bankruptcy will review all your submitted financial documents to ensure accuracy before making a decision on the worthiness of your bankruptcy filing. This includes reviewing the balances of all bank accounts you list in your paperwork.
The trustee may also inquire with financial institutions about other accounts bearing your name to ensure you're not withholding information about your finances. If the trustee discovers bank accounts you did not list in your bankruptcy paperwork, the trustee may force you to add those accounts to your bankruptcy filing or may recommend the court dismiss your case altogether.
Chapter 7 Liquidation
If you file for Chapter 7 bankruptcy liquidation, the trustee in charge of your bankruptcy will review the balance in all your financial accounts after the court approves your bankruptcy. The trustee must review your account balances to make sure the court seizes all nonexempt funds per Chapter 7 bankruptcy laws in your state. Each state allows you to exempt a varying amount of cash in your bank accounts, with the remaining amounts surrendered to creditors to pay your debts.
Chapter 13 Bankruptcy
During Chapter 13 bankruptcy, you make regular payments to the trustee in charge of your case as part of your court-approved debt repayment plan. The trustee may conduct periodic reviews of your finances, including your business and personal bank accounts, to ensure you have sufficient cash to continue making payments as normal.
The trustee also reviews your bank accounts to make sure you're not hiding assets from the court and your creditors. A trustee discovering hidden assets or finances may force you to add these accounts to your debt repayment plan.
Read More: How to Find Out If Someone Has Filed for Bankruptcy in New Jersey
Operating Your Business
In bankruptcy, the court may grant the trustee temporary power to operate your business if the court believes continued operation may benefit your creditors. This places the trustee in charge of your business bank accounts and effectively locks you out of controlling these finances until the court turns the business over to you or the trustee conducts a liquidation of the company's assets. Liquidation is the final outcome for a Chapter 7 bankruptcy, while continued operation occurs during a Chapter 13 bankruptcy.
