Do I have to open a new bank account if I file Bankruptcy or a Consumer Proposal?

by Joel Sandwith on February 4, 2014

Yes, most of the time, that is what we’ll ask you to do.

Any time someone is considering their options with us, I always ask where they do their day-to-day banking.  If it’s anywhere they have any ‘unsecured’ debt, like overdraft, line of credit or credit card, I suggest they open a new bank account somewhere they have no debt, and start banking there.  Even if the person decides not to file a bankruptcy or proposal, and here’s why:  the bank has the right to take the money out of that account.

You may not realize it, but when you open an account, you are giving permission for the bank to ‘offset’ any debts with deposits you make (payroll, child tax benefit, etc).  Generally no bank is going to use that right of offset if all your payments are on time, that’s what keeps them happy.  But, if you stop making payments, or file a consumer proposal or bankruptcy, they will freeze your account, and you won’t want to put any money in there any more.  So, why not just start by opening a new account and keeping your money safe?

Here’s another good reason – many of the people I meet tell me they’d like to rebuild credit at some point in the future.  It will be far easier to do this with a new bank, than with the old bank that you owed money to.

Struggling to pay all your debts?  Call our offices at either 866-747-0660, or 310-PLAN (no area code required) or locally here in Sarnia at 519-344-1058, to book an appointment to come and see me.

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{ 2 comments… read them below or add one }

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