Do I need to close my bank accounts if I file for Chapter 7 bankruptcy?

You do not have to close your bank account after filing for Chapter 7 bankruptcy. In fact, doing so could complicate matters, at least if there is money in the account for you to move. This is because once you withdraw the cash, your trustee will begin wondering where it is, as they need to keep track of your assets. It will likely become part of the bankruptcy if you take it out and report it to your trustee, meaning you could lose it. However, if you withdraw and then hide it, you could be reported for fraud and have your case thrown out. Before you decide whether to close an account and withdraw the funds, talk to your lawyer.

Most attorneys advise that you start spending the money you have in your account before you file. Do not make large, unnecessary purchases, but spend it on day-to-day living expenses, as well as any repairs to your car or home. Be sure to keep the receipts, since your trustee has a right to ask how you have been spending the money in your account.

Try to pay cash for expenses rather than writing checks, since the latter may not be withdrawn from your account by the time the bankruptcy goes through. Thus, you run the risk of the trustee freezing or requesting the funds in your account before the checks are cashed. Avoid paying friends and family money just before the bankruptcy, even if you owe them. This could look suspicious, because lending money to others during bankruptcy is a common fraudulent tactic.