Wells Fargo is Still Freezing Bank Accounts!

Posted on February 21, 2011 by Christine Wilton

 Back in July, 2010 I reported on the 9th circuit case of Mwangi v. Wells Fargo Bank, N.A., "Wells Fargo Won't Stop Freezing Bank Accounts." Our local group of attorneys here in the Central District of California have it on good word from sources inside Wells Fargo's bankruptcy department that the bank continues to freeze accounts while the litigation case is reviewed by the bankruptcy court in Nevada.  The Mwangi case has been remanded back to the bankruptcy court to determine whether Wells Fargo's continuation of the administrative freeze and retention of the account funds claimed exempt, in the absence of instructions from the trustee, was reasonable in light of the debtor's demand that the subject account funds be released for their use.

This is a case to watch as it affects all debtors filing bankruptcy, clients of Wells Fargo Bank, N.A. and the Automatic Stay under 11 U.S.C. § 362(a).  On January 21, 2011 Christopher P. Burke, Esq. and Scott C. Borison, Esq. attorneys for Eric Mwangi and Pauline Mwicharo [Plaintiffs] filed case no. 11-01022-bam in U.S. Bankruptcy Court for the District Court of Nevada this Adversary Class Action Proceeding.  

The allegation from the complaint alleges that Wells Fargo Bank acted in Willful Violation of 11 U.S.C. §362(a)(3).  If the court determines Wells Fargo's conduct was a willful violation of the stay under §362(a), then the bankruptcy court will need to determine what, if any, damages the debtors are entitled to under §362(k)(1).  We will keep you posted on the progress of this pending case and the outcome.  In the meantime, don't bank where you owe money.

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Keep Your Holiday Spending Down If You're Planning on a New Year Bankruptcy

Posted on December 20, 2010 by Christine Wilton

For those of you waiting until after the Holidays to file your bankruptcy case, heed my advice.  Here are my tips and pitfalls to avoid now, if you're planning a New Year fresh start.

  1.  Don't spend more than $500.00 on any one occasion, unless it's necessary for the maintenance and support of your household.  Car repairs and groceries, etc. are okay.  You get the idea.
  2. Don't use your credit cards and if you need to for an emergency, follow tip number 1 above. 
  3. Don't spend your savings or cash in your retirment accounts to pay debts.
  4. Don't borrow money from relatives.
  5. Don't bank where you owe money.  Open a new account with a bank that you don't owe any money to.  This way, your cash will not be frozen when you file your case. 
  6. Make home made Holiday gifts, or just spend time with loved ones instead of buying presents.  Create new traditions that spread the joy of gratitude for those in your life.
  7. You absolutely MUST take your pre-filing credit counseling course BEFORE you file your bankruptcy case.  If you don't, you're case will be dismissed and you'll have to start over.

I wish you all a holiday season filled with Joy and Love.  I am grateful for those of you that have touched my life personally and professionally.  Thank you to all my teachers.  Blessings and Peace to you.

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Wells Fargo Won't Stop Freezing Bank Accounts

Posted on July 7, 2010 by Christine Wilton

Many a Creditor has driven us bankruptcy lawyers and our clients nuts with their antics, but freezing a client's bank account after their case has been filed takes the cake.  The Ninth Circuit BAP just released In re Mwangi Case No. 09-1408 (9th Cir.B.A.P., June 30, 2010), which held that Wells Fargo's national policy of placing administrative holds on accounts of persons filing a bankruptcy petition violates the automatic stay by exercising control over property of the estate.  The issue in Mwangi was their national procedure of running a computerized comparison of all newly filed Chapter 7 bankruptcy cases against Wells Fargo's list of account holders.  If they found a match of one of their account holders who had also filed bankruptcy, then Wells Fargo would immediately 'freeze' that account, preventing the debtor from having access to their money. 

It's no secret that Wells Fargo has been notorious for freezing the accounts of debtors filing bankruptcy under Chatper 7.  We also have it on good word that Wells Fargo will continue to hold funds while they appeal the Mwangi case. 

Keep in mind that your bank account is property of the estate upon filing your bankruptcy case that presumably includes the cash in your bank accounts.  So, don't go on a spending spree just yet.  Any Exempt funds are not exempt until 60 days after the conclusion of your meeting of creditors.  Technically, all of your assets, including cash on hand must be turned over the trustee to administer your estate, but that is just not practical.  This means that the law is not on your side here and while Wells Fargo can put a freeze on your accounts, they also must act prudently by asking for guidance and direction from the Trustee and/or Court as to what to do with your funds.

This reminds me of the term "vicious compliance."  This term seems to crop up in certain union worker circles when they don't like a particular ruling or law, they will strictly comply with it and demonstrate that it doesn't work and then use it against management by knowing it better.  So, if Wells Fargo wanted to 'viciously' comply with the law, they would stop freezing accounts and simply send all the money to the trustee.  No matter how you slice this ruling, Wells Fargo is still a big bully.

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