Wells Fargo told by 9th Circuit to stop freezing bank accounts
Well Fargo has a bad habit of freezing a bank account upon learning that the accountholder has filed for bankruptcy protection. The explanation given is that it preserves the money in the account for the trustee to administer. Accountholders are often surprised and annoyed that they cannot access the money they were planning on using to buy food, gas and other necessities, and requests made of Wells Fargo go unobliged.
The 9th Circuit has found that Wells Fargo’s actions are improper. First, the act of freezing the account is an exercise of dominion over property of the estate, which is a violation of the automatic stay provided upon the filing of a case. Second, if a debtor has exempted this property from his or her bankruptcy case, then there is no need to protect such property for the benefit of the trustee, since the trustee has no right to those funds.
Whether Wells Fargo will comply remains to be seen. We have always, and will continue, to advise our clients to move their checking and savings account funds out of Wells Fargo accounts over to a bank with which they do not owe money.
Wells Fargo froze all of my accounts after my Chpt. 7 filing and even cancelled the VISA card that I had with them, even though I owed them no money and they were not involved in the bankruptcy filing in any way. They seem to be a corporate behemoth that is only concerned with adhering to their own company policy, rather than listening to their customer’s needs. As a result of their size and power, it seems that they feel entitled to have appointed themselves as financial arbiters and agents of the bankruptcy court. If the bankruptcy Trustee deems it necessary to obtain financial information from the bank or has concerns about the security of the estate, then Wells Fargo should comply with any request of the court – not deputize themselves as a legal entity to assist the court when no such assistance is asked.