Is Your Bank Account Protected if You File for Chapter 7 Bankruptcy in Pennsylvania?

Bankruptcy can be scary, especially when using Chapter 7.  This is known as “liquidation” bankruptcy, and it sounds like your money and assets all go away to pay off your debts.  In reality, there are exemptions that protect your money, though they are limited in how they protect your bank account.

When filing for Chapter 7 in Pennsylvania, you can usually choose between state and federal exemptions.  The basic answer is that bank accounts aren’t explicitly protected under either set of exemptions, but your “wildcard” exemption can protect money in the accounts.  The protected amount is usually higher under federal exemptions.

For a free review of your case, call the Pennsylvania bankruptcy lawyers at Young, Marr, Mallis & Associates at (215) 701-6519.

Can the Bankruptcy Trustee Liquidate My Bank Account?

When you file for Chapter 7 bankruptcy, the goal is to sell off property and assets to pay back your debts.  This process is known as liquidation, and it is overseen by a bankruptcy trustee.  This is the person who collects your assets – including accounts – and sells them or cashes them out as needed.

People may have all sorts of accounts when filing for bankruptcy, from checking to savings to investment accounts.  Odds are that if you are using Chapter 7 and qualify under means tests, you do not have much to start with in these accounts.

While the bankruptcy trustee can legally access and empty your accounts, it might not be worth it.

Will Bankruptcy Empty My Bank Accounts?

Bankruptcy trustees can access your accounts and take money out to satisfy your debts, but their practical ability to do so might be limited.  If you have only a few hundred dollars in the account, it might not be worth their time or effort.

If you have a huge account, it will likely be targeted first because this cash is already liquid and can be spent instead of selling off property first.

If you have enough money in your account and can pay down debts, you should likely consider this option before filing for bankruptcy in the first place.  By the time you get to bankruptcy, it is likely your accounts are strained and perhaps not worth liquidating.

At the end of the day, you need a place to deposit your paychecks and an account to pay for groceries and other expenses.  Nobody expects you to turn to a cash-only life, and bankruptcy simply cannot take everything you have.

Are Bank Accounts Exempt from Bankruptcy in Pennsylvania?

When filing for Chapter 7, there are exemptions that take certain property (or certain amounts) out of the pool of what your trustee can liquidate.  This is intended to help you keep the things you need – your clothes, your car, your house, etc.

Bank accounts are not explicitly covered, but it is vital to understand the exemptions you can take.

Available Exemptions

The most common exemptions people want are the homestead exemption to keep their house, a motor vehicle exemption to keep their car, and a “wildcard” exemption to cover miscellaneous things.  There are other exemptions – such as a “tools of the trade” exemption for work materials – that might apply to your given situation, so always work with a Pennsylvania bankruptcy lawyer who can determine what exemptions you need.

None of these explicitly cover your bank account, so that usually goes under the wildcard exemption.

State Exemption Amounts

In Pennsylvania, you can choose between the set of state or federal exemptions, but you cannot mix and match.

Pennsylvania has no homestead exemption or motor vehicle exemption, which often makes the federal exemptions better for your situation.  In Pennsylvania, the wildcard exemption is only $300, which would not protect much of your bank account.

Federal Exemption Amounts

Federal exemptions statutes list the base values, adjusted annually in the federal register.

As of April 1, 2025, the exemptions are $31,575 for your house, $5,025 for your car, and $1,675 for the wildcard exemption.  If you don’t have a house, you can add on up to $15,800 of the homestead exemption you didn’t take for a total wildcard exemption of $17,475.

Maximizing Exemptions

The federal option is therefore the highest option for protecting your bank account.  If you do not have a house or other property to exempt, you can also protect far larger accounts under the federal exemptions.

If you want to maximize your exemption for your bank accounts, this is the best option for that.  However, you should always talk to a lawyer to make sure there are no other drawbacks to taking the federal exemptions.

Will Filing for Bankruptcy Freeze My Bank Accounts in Pennsylvania?

There is nothing about the process of filing for bankruptcy that automatically freezes your accounts by law.  In fact, when you file, an automatic stay goes into place to freeze other people out of making claims on your accounts.

At the same time, many people report that certain banks and credit unions have frozen their accounts when they filed for bankruptcy.  This is likely a policy of those institutions, not a bankruptcy rule.

Talk to a lawyer before filing bankruptcy about where your money is, what types of accounts you have, and what institutions have those accounts.  It might make more sense to move your money or consolidate it when trying to pay off debts, let alone when actually filing for Chapter 7 bankruptcy.

Can I Hide Bank Accounts in Bankruptcy?

Trying to hide money from the courts or from the bankruptcy process is never a good idea.  Not only will this likely end your case, it might result in criminal fraud charges.  Any assets or bank accounts you have need to be properly disclosed.

Call Our Bankruptcy Lawyers in Pennsylvania for Help

If you are considering Chapter 7, call (215) 701-6519 for a free case review with Young, Marr, Mallis & Associates’ Montgomery County, PA bankruptcy lawyers.