I have overdrawn my bank account ($500). Can I discharge this "debt" as an unsecured debt in a Chapter 7 Bankruptcy?

Asked over 2 years ago - Providence, RI

I get paid at the end of each month and do not get paid nearly enough to pay my bills. The last 3 months, my bank account has been overdrawn and I have deposited my check and about $500 has been taken out of it instantly to cover the overdrawn amount. I just can't continue to do this and desperately need to file Chapter 7 Bankruptcy. Most of the $500 each month is made up of $39 fees and $6 per day continued overdraft fees. Can I open up a bank account at another bank and then discharge the overdrawn amount at the first bank on Schedule F of my Chapter 7 Bankruptcy?

Attorney answers (4)

  1. Steven Anderson Leahy

    Pro

    Contributor Level 17

    3

    Lawyers agree

    Answered . Generally, unsecured debt is dischargeable in bankruptcy. In this case, the bank lent you $500.00 to cover the overdrawn check. That debt is dischargeable, just like any other personal loan. (Of course with all the exceptions available to other personal loans).

    I hope this helps.
    Respectfully,
    Steven A. Leahy
    www.chicagotaxteam.com

    Please note that the above is not intended as legal advice, it is for educational purposes only. No attorney-... more
  2. Alan D. Walton

    Pro

    Contributor Level 19

    3

    Lawyers agree

    Answered . You have not really overdrawn your account by $500. Your bank is gouging you with fees. You should definitely switch banks before your next check comes. I recommend that you stop using a debit card and pay cash only. This will avoid your getting hit with excessive fees every month. And yes, this would be an unsecured debt for schedule F in your bankruptcy.

  3. Malissa Linn Walden

    Contributor Level 9

    2

    Lawyers agree

    Answered . Yes.

    There is a list of debts that cannot be discharged in a Chapter 7 bankruptcy, but this is not one of them.

    You should open a new bank account to help you get your fresh start! You can list your current bank as an unsecured creditor and the total amount they are claiming you owe -- regardless if it is money paid out or other fees will be discharged.

    If you have paid $500 each month for the last couple of months prior to filing, you will need to list the bank in your Statement of Financial Affairs as well.

    Good luck!

    This information should not be construed as formal legal advice or the formation of an attorney /client relationship.
  4. Maria Pardue Esq.

    Contributor Level 9

    2

    Lawyers agree

    Answered . Yes you should open a new bank account at a bank where you don't currently have any debts, such as a local credit union where you could be earning a higher rate of interest anyway. The bank where you owe $500 is an unsecured creditor and need to be listed in your bankruptcy petition and that debt will be discharged. In Tennessee if you paid any creditor more than $600 in the last 90 days, you'll need to disclose that in your financial affairs portion of the petition. Good luck on your fresh start.

    If this information was helpful, please indicate by clicking “Good Answer” and/or “Best Answer” below.... more

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