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Wells Fargo?s Freezing of Bank Accounts After Bankruptcy Found Illegal

By Sam Glover

Apparently, Wells Fargo has a national policy of freezing its customers’ accounts as soon as they file bankruptcy. This policy apparently has something to do with what Wells Fargo thinks are its obligations to the Bankruptcy Estate. Of course, many debtors will have exempt funds in their accounts, but Wells Fargo stubbornly refuses to give the money back without the blessing of the U.S. Trustee.

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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Full post as published by Caveat Emptor on July 06, 2010 (boomark / email).