Beware of Wells Fargo Bank Accounts

Debtors should not maintain bank accounts at the same bank where they owe money on a credit card. The depository agreement provides a right of set-off against the account. In other words, if you owe Bank of America on a $5,000 credit card and you have a bank account with Bank of America, the bank can seize the money from your bank account.

Wells Fargo has been freezing bank accounts even if the depositor does not owe it any money when the depositor files bankruptcy. The bank is concerned that a bankruptcy trustee will claim the bank has a duty not to permit the debtor to use his or her bank account because the trustee might claim the money. A debtor might be stuck not being able to pay his bills because Wells Fargo denied access to the account. The validity of this freezing of the account is being litigated accross the country. Though it is unlikely for accounts with small balances that Wells Fargo would freeze the account, the best advice is don’t use Wells Fargo(and remember if you have a Wachovia account it is now Wells Fargo).

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