Before you file for Bankruptcy or a Consumer Proposal when you owe money to your bank, it is advised you should open a new bank account. Money owed to a bank can come from many sources, including unsecured debts such as credit cards, loans, or an overdraft account. It is also possible to open a new bank account even if you have already declared Bankruptcy or filed for Consumer Proposal. A Licensed Insolvency Trustee will advise you on opening a new bank account after or before filling for Bankruptcy in Ajax. This article highlights why, when and how to open a new bank account if you have unsecured debts.
What is the right time to open a new bank account?
The right time is before your creditors learn of your intention to file for Bankruptcy or Consumer proposal. This means you should open the account before filling it and then transfer any many available in your current bank account to the new account.
Suppose you failed to open a new account before declaring Bankruptcy or filling out for Consumer Proposal. In that case, you could still do it as it is against the Canadian Bank Act for any bank to bar you from opening an account based on filling for Bankruptcy or Consumer Proposal. You will, however, not be able to get a new account with an overdraft as it is considered a form of credit.
For convenience, it is advised that you open a new account before filing for Bankruptcy or a Consumer Proposal.
What is the process of opening a new account?
While opening a new account gives you more control over your money, it may not be exciting for the following reasons:
- The entire process is time-consuming
- You are likely to lose some beneficial features like overdraft
Nonetheless, it is worth opening a new account if you consider filing for a Consumer Proposal or Bankruptcy in Ajax.
Opening a new bank account is a stepwise process that includes:
Step one: finding the right bank
Here is what to consider when choosing a new bank:
- Ensure you owe the new bank no money
- A bank with no monthly fees
Many banks are affiliated and may be under the same ownership. Therefore, when looking for a bank where you owe no money, you should look into any affiliations and ownership as you may have a new account in a subsidiary of a bank to which you owe money. This will not solve your financial woes.
Virtual banks are the best option for banks with lower or no monthly fees.
Step two: opening a basic bank account
Open this account at a bank selected following the guide in step one.
Step three: withdrawing money from your present account
If you have any money available in your current account, withdraw and deposit it in the new account.
Step four: changing your information
Change your banking information in places where you have set direct deposits, like at work and in government, among others. This ensures any payments to you do not go to the old account where they can be frozen or taken.
Step five: linking your bill payments to your new account
Change all your bill payments to ensure they are linked to your new account, and cancel all payments from your old account. This is important in providing your bill payments like rent, and others do not bounce because funds are not available in your old account.
Step six: closing your old bank account
This step will, however, not be possible if your old account is in overdraft.
Are there consequences for not opening a new bank account?
If you owe money (unsecured debts) at the same bank where you have your chequing or savings account, you should open a new bank account elsewhere before filling out for Bankruptcy or a Consumer Proposal. This is important because:
- If your current bank learns that you are filing for Bankruptcy or a Consumer Proposal, they can freeze your account and take your money to recover what you owe them.
- It takes time to notify all of your creditors to stop payments after filling. Even though they are not allowed to continue taking out payments for unsecured debts after you file, they may continue taking the payments out of your account.
Although you are likely to lose some of the beneficial features in your old account, opening a new bank account if you are considering filing for Bankruptcy or Consumer Proposal will give you more control over your money hence worth in the long run.
Speaking to a Licensed Insolvency Trustee
The first thing to do when you are considering managing your debts through filling for Bankruptcy in Ajax or a Consumer Proposal is to contact Dana MacRae. At Dana Trustee, we can advise you on the best debt management solution between declaring Bankruptcy and filling out a Consumer Proposal, among other options. We can advise you on opening a new bank account and related concerns. Do not hesitate to contact us at Dana Trustee.