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Bankruptcy and Overdraft Laws

An overdraft occurs when money is taken out of a bank account and the available balance goes below zero. In this case, the account is said to be overdrawn. If there is an agreement with the account provider for an overdraft, and the amount overdrawn is within the authorized overdraft limit, then interest is normally charged at the agreed rate. If the negative balance exceeds the agreed terms, then additional fees may be charged and higher interest rates may apply. Overdrafts can cause many legal questions during a bankruptcy, like the ones answered below by Experts.

Can an overdraft caused by a scam persuading a person to use insufficient funds be discharged in bankruptcy?

The overdraft would normally be dischargeable in a bankruptcy proceeding. Section 523 of the Bankruptcy Code list the exceptions to discharge. A bank overdraft is considered dischargeable. You can read the Code at this link: http://www.law.cornell.edu/uscode/11/523.htm

What is the statute of limitations for collecting a overdraft debt (debit card) in the state of Washington?

The Washington statute starts here 4.16.040 and 4.16.080. Oral Agreement – 3 years, Written Contract –6 years, Promissory Note –6 years, Open-Ended Account – 3 years. If the creditor has taken steps to collect on the debt, this may toll the statute and start the time period over again. When you are not sure about how the statute applies in your case, you should ask an Expert for legal insight based on an assessment of your particular case details.

When a separated couple is in debt and has accumulated a large balance, can they file for bankruptcy?

The husband can file bankruptcy and get rid of this debt if eligible. The person can check eligibility here: http://www.uscourts.gov/FederalCourts/Bankruptcy/BankruptcyBasics/Chapter7.aspx.

Also, the wife would have to file along with the husband to be free from the debts as well. One of the primary purposes of bankruptcy is to discharge certain debts to give an honest individual debtor a "fresh start." The debtor has no liability for discharged debts. In a chapter 7 case, however, a discharge is only available to individual debtors, not to partnerships or corporations. Although an individual chapter 7 case usually results in a discharge of debts, the right to a discharge is not absolute, and some types of debts are not discharged. Moreover, a bankruptcy discharge does not extinguish a lien on property.

A worker made an error that could have resulted in over drafting the business checking account. The person wired funds from their own account to cover the overdraft; the owner is contemplating doing an assignment for the benefit of creditors or filing Chapter 11. Is the money the worker loaned the company in danger of being viewed as a preferential payment?

The alleged transaction could be subject to preferential transfer avoidance by the bankruptcy trustee. There is an exception under 11 USC §547(c)(9), that permits non-consumer transactions of less than $5,475 to be exempt from the trustee's avoidance powers. So, if the loan was for less than $5,475, then you might be okay. There is another exception for 11 USC §547(c)(2)), which exempts transactions made in the ordinary course of business or according to ordinary business terms. The thing here is that the transaction was anything but ordinary in character. If you are faced with a similar situation and are not sure how the overdraft law applies in your case, asking an Expert to evaluate your case details and provide legal insights would be a good option to consider.

A person has a credit card with a balance. Do they list it on Schedule F? Also, they have a line of credit with the bank attached to checking account. Do they have to list that?

If a person owes the money on the day they file then it needs to be listed on Schedule F. If the person in debt has already paid it off then they do not need to list it. But if the amount is over $600 then it has to be listed the statement of financial affairs. The same would apply to the overdraft protection. Also just because the person pays it off; the creditor could still decide to close the accounts due to the bankruptcy filing.

Having the right information about overdraft laws as they apply in the case of a bankruptcy can help individuals and businesses deal with difficult situations and make the right legal decisions. To be sure of your legal standing and the best course of action applicable to your circumstances, ask an Experts for legal insights.
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