How to Protect Bank Accounts During Foreclosure
A bank mortgage is the way most people finance the purchase of a home. If the borrower goes into default on the mortgage loan, meaning they no longer pay it, the bank will begin foreclosure procedures to physically take the property to sell to pay off the loan. Protecting other assets such as a bank account in the foreclosure process is easy since most institutions will only focus on the property until after the foreclosure process is complete.
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Instructions
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1
Review who your lender is and where your bank accounts are. Make a list of the names, account numbers and value of the account.
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2
Determine if the institutions where the bank accounts are held are associated with the lender's bank. Many banks have lenders who are subsidiaries with different names or have merged with other companies. Know whom you are banking with!
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3
Change banks if the lending institution and bank are the same place. By federal law, banks can seize assets from accounts held at their own institution to pay a debt owed to them without notice.
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4
Determine the need for further protection. Lenders who foreclose may regain their investment when the property is seized and they are able to sell it. Unless they determine it to be worthwhile, few will pursue court proceedings to regain their losses. If there is concern about being pursued with a court lawsuit, go to Step 5.
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5
File for an LLC (Limited Liability Company) or a Family Limited Partnership and assign all assets other assets into the company, keeping personal accounts very small.
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6
File bankruptcy if other debts are also high and unmanageable to eradicate all debts from credit reports and start over.
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Tips & Warnings
An attorney can be used to file LLC or Family Limited Partnership agreements, but if cash is an issue, as it probably is for people facing foreclosure, seek an online company.
