Monday, September 9, 2013

Wells Fargo is Freezing ALL accounts for Chapter 7 Debtors

Wells Fargo use to freeze the accounts of Debtors who had a checking or savings account with them and  also had a credit card or car loan with them. This is called a set off.  A lot of banks due this which is why I always tell my clients if you have a bank account with a bank you owe money to, you need to move your account before filing.
Well now, Wells Fargo is freezing all of their account holders who file Chapter 7  regardless if they owe wWells or not.  Wells Fargo's authority to do this comes from a United State Supreme Court Case, Citizens Bank of Maryland v. Strumpf, 516 U.S. 16 (1995).  Where the Supreme Court ruled that a deposit account is “nothing more or less than a promise to pay, from the bank to the depositor” and the bank’s “temporary refusal to pay was neither a taking of possession of … property nor an exercising of control over it, but merely a refusal to perform its promise.”  Accordingly, the Court ruled that the freeze was allowed and did not sanction the bank for its conduct.  Strumpf involved the bank’s right to “set-off” funds – taking funds from a checking or savings account held at the bank to pay for a debt owed to that bank. 
The Middle District of Florida has adopted this interpretation in cases where the debtor merely has a bank account at the deposit institution, even when there is no corresponding debt that triggers a right to set-off.  In the case In re Young, 2010 WL 3965698 (Bankr. M.D. Fla. 2010), the Court quoted the language in the Strumpf case and ruled there was no violation of the automatic stay.
The Middle District covers residents of Pasco, Polk, Hillsborough, Pinellas, Manatee, Sarasota, and other counties in and around Jacksonville, Ocala, Orlando, Fort Myers, and Naples, Florida.  

Carol A. Lawson,Esq., is a Clearwater-based boutique bankruptcy law firm that helps client navigate the Bankruptcy Code, providing our clients with a fresh start and relief from debt.  We assist clients with bankruptcy Chapter 7 and Chapter 13,  loan modifications, foreclosure defense, and estate planning, for clients in Clearwater, Clearwater Beach, Oldsmar, Dunedin, Safety Harbor, Palm Harbor, Tampa, Westchase, Carrolwood, St. Petersburg, St. Petersburg Beach, Treasure Island, Madeira Beach, Reddington Beach, Kenneth City, Gulfport, Seminole, Lutz, New Port Richey, Trinity, Port Richey, and other areas that comprise the greater Tampa Bay area.