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The 9th Circuit’s Bankruptcy Appellate Panel just did away with Wells Fargo’s particular brand of debtor harassment, holding that the policy violates the bankruptcy stay. The question of whether Wells Fargo’s violation is willful and entitles the debtor to sanctions will go back to the district court.
Despite the 9th Circuit’s decision, Wells Fargo has apparently decided not to comply, since it plans to appeal.
Wells Fargo’s Procedure of Freezing Accounts After A Bankruptcy Filing Invalidated | Bankruptcy Law Network (thanks, Jay!)
Mwangi v. Wells Fargo Bank, N.A. | U.S. Bankruptcy Appellate Panel of the 9th Circuit
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They are still freezing bank accounts with no regard for the decision. My clients just filed Chapter 7 on 1/25/2011. Their accounts plus those that they are simply “holding” for others as trustee for an ailing older mother and 3 under-age children were frozen with no warning. When my client went to the store to purchase a supply for his child’s homework, the debit card was declined.
We did research and pulled up this case, which was completely on point. However, Wells Fargo still refuses to comply and relies on the decisions that the 9th Circuit clearly had disdain for.
If you have clients with Wells Fargo accounts, advise them to pull out living-funds from their account before filing the petition. Or, better yet, tell them to move all assets from Wells Fargo to locally owned banks prior to preparing the petition.
*NOTE none of this is legal advice. I am not a lawyer.
I wonder if this includes accounts where the debtor has not included Wells Fargo in the bankruptcy petition because there is no outstanding loan with them. If so, that is crazy. Regardless, couldn’t they be sued/fined for violating the automatic stay?
Good luck to all,
ep