What happens to the debtor’s bank accounts?

What happens to the debtor’s bank accounts?

On Bankruptcy, all of the consumer debtor’s property automatically vests in the trustee. That means that the consumer debtor’s property is placed in the hands of the trustee for the administration. Therefore, the consumer debtor has a duty to deliver up his or her property to the trustee. For example, the consumer debtor’s bank accounts technically belong to the trustee since the bank owes the consumer debtor the money. The moneys in those bank accounts must be turned over as soon as possible after the assignment in bankruptcy is made. The trustee will, on filing, notify the bank of the assignment.

When the consumer debtor receives a pay cheque for the period subsequent to the date of bankruptcy, that money may be deposited into the bank account. The trustee in bankruptcy will not attach that amount or request that the consumer debtor pay over that sum to the estate. However, in a case where the consumer debtor earns more than a reasonable amount, the trustee will require that the consumer debtor pay the surplus income or turn over a portion of the salary to the trustee for the benefit of creditors. In this connection, see Chapter 10. The Superintendent publishes standards each year. The standards are a scale which the trustee uses in determining whether the consumer debtor can afford to pay any moneys to the creditors while the consumer debtor is undischarged.

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