Yes, you can open a bank account during Chapter 13, but the trustee may monitor it
You can open a bank account while you are in an active Chapter 13 repayment plan. Banks do not automatically reject applicants based on bankruptcy status alone. However, your Chapter 13 trustee has the legal right to know about and monitor accounts where you receive income, because the trustee's job is to collect your monthly plan payment from your disposable income.
The key difference between Chapter 13 and Chapter 7 is that Chapter 13 is a repayment plan, not a liquidation. You keep your assets and your income, but you commit to paying creditors through the trustee over three to five years. A bank account is a normal part of managing that income, and most trustees expect you to have one.
What matters is disclosure. If you open an account and do not tell your trustee, and the trustee later discovers it during a review or audit, you can face sanctions or even dismissal of your case. If you open an account and report it, the trustee may ask questions but will not typically prevent you from having it.
Key Takeaways
- You must disclose any new bank account to your Chapter 13 trustee within a reasonable time, usually when you file your next financial statement or when asked directly.
- Banks may run a ChexSystems check, which shows banking history but not bankruptcy status, so most will open an account for you without issue.
- The trustee may place a hold or monitor accounts where you receive wages, because income is part of your repayment obligation.
- Some trustees require you to list all accounts on your Chapter 13 plan documents; check your trustee's local rules or call their office to confirm what they need.
- If you already had an account before filing, you do not need to close it, but you must keep the trustee informed of its status and balance.
What banks look for when you apply
Most banks use ChexSystems, a banking history report similar to a credit report. ChexSystems tracks overdrafts, closed accounts, and fraud disputes—not bankruptcy. Bankruptcy does not appear on ChexSystems, so your Chapter 13 filing will not automatically disqualify you.
Some banks do pull your credit report as part of the application, and they will see the bankruptcy. However, many banks, especially credit unions and online banks, are willing to open accounts for people in active bankruptcy because they understand that Chapter 13 filers are making a good-faith effort to repay. The account itself carries no risk to the bank—they are simply holding your money.
You may face rejection if you have recent overdrafts, fraud disputes, or multiple closed accounts on ChexSystems. If that happens, look for banks or credit unions that specialize in second-chance banking, or ask your trustee's office for a referral—some trustees work with specific institutions that understand Chapter 13 filers.
Disclosure to your trustee and what happens next
After you open an account, you should notify your Chapter 13 trustee. The method depends on your trustee's office. Some require you to file an amended Schedule A/B (property statement) listing the account. Others ask you to call or email. A few include account disclosure as part of your regular financial reporting. Call your trustee's office and ask: "I opened a bank account. What do I need to tell you and how?"
When you disclose the account, have the following information ready: the bank name, account type (checking or savings), account number, and the current balance. The trustee will note this in your file. If the account is where your wages are deposited, the trustee may ask for the routing and account number so they can coordinate wage deductions with your employer if needed.
The trustee will not typically freeze or seize a bank account simply because it exists. However, if the account balance grows unusually large and the trustee believes you are hiding income or not paying your plan payment, they may investigate. This is rare and usually happens only when there is a pattern of non-disclosure or missed payments.
Accounts where wages are deposited versus savings accounts
Your Chapter 13 trustee cares most about accounts where you receive income, because income is what funds your repayment plan. If you set up direct deposit of your paycheck into a new account, tell the trustee right away. Some trustees coordinate with your employer to deduct your plan payment directly from your paycheck before it hits your account, which simplifies the process.
A separate savings account where you deposit money from your checking account is less of a concern to the trustee, but you should still disclose it. The trustee's interest is in ensuring you have enough disposable income to pay the plan—not in controlling how you organize your accounts.
If you receive irregular income (self-employment, bonuses, tax refunds), keep records of deposits and be prepared to explain them to the trustee. Tax refunds in particular are often claimed by the trustee as part of your plan payment, so do not assume you can keep them.
What to do if the trustee objects or places a hold
If your trustee objects to the account or places a hold on it, you will receive written notice. This is uncommon, but it can happen if the trustee believes the account is being used to hide assets or income. Do not ignore the notice. Contact your bankruptcy attorney immediately.
Your attorney can file a motion to lift the hold or can negotiate with the trustee. Often, the issue is a misunderstanding—for example, the trustee may think you are hiding money when you are actually saving for a necessary expense. A conversation between your attorney and the trustee's office can usually resolve it quickly.
If you do not have an attorney and cannot afford one, contact your local legal aid office. Chapter 13 disputes are within their scope, and they may be able to help you respond to the trustee's objection.
Accounts you had before filing Chapter 13
If you already had a bank account when you filed Chapter 13, you do not have to close it. You must list it on your Schedule A/B (property statement) at the time you file, and you must keep the trustee informed of its status. Most trustees do not require you to move money or change banks simply because you filed bankruptcy.
However, if the account is in a state where the bank is also a creditor (for example, you have a loan or credit card with the same bank), the bank may exercise a right of setoff—taking money from your account to pay down the debt. This is legal, but it can complicate your Chapter 13 plan. If this happens, tell your attorney and trustee immediately.
If you want to close an old account and open a new one with a different bank, you can do that. Just make sure you disclose both the closure and the new account to your trustee.
Protecting your account from creditors during Chapter 13
One advantage of Chapter 13 is the automatic stay, which stops most creditors from taking action against you. This includes bank levies and garnishments. Once your Chapter 13 case is filed, creditors cannot freeze your account or take money from it without court permission, and that permission is rarely granted while you are in an active plan.
However, the automatic stay does not protect you from the bank itself if you overdraft or violate the account agreement. It also does not protect you from the IRS or other government agencies in certain situations. Keep your account in good standing by maintaining a positive balance and following the bank's rules.
If a creditor attempts to levy your account after you filed Chapter 13, contact your attorney immediately. The creditor is violating the automatic stay, and your attorney can file a motion to hold them in contempt and recover damages.
Frequently Asked Questions
Do I have to tell my trustee about a savings account I open for emergencies?
Yes. Any account in your name should be disclosed to your trustee, even if it is a savings account. The trustee needs to know about all your financial accounts to ensure you are complying with your plan. Call your trustee's office and ask how to report it—usually a phone call or email is enough.
What if I open an account and forget to tell the trustee?
Tell the trustee as soon as you remember. Prompt disclosure, even if late, is much better than the trustee discovering the account on their own during an audit. Explain that you opened it for direct deposit or another legitimate reason and forgot to report it. Most trustees will accept this if it is your first mistake.
Can the trustee take money from my account without asking?
No. The trustee cannot unilaterally take money from your bank account. They can only collect your plan payment through wage deduction or through your monthly payment arrangement. If money disappears from your account without explanation, contact your bank and your attorney immediately.
Will opening a new account hurt my credit score?
No. Opening a bank account does not affect your credit score. Banks do not report account openings to credit bureaus. Your credit score is already affected by the Chapter 13 filing itself, so opening an account will not make it worse.
Can I use a prepaid card instead of a bank account?
You can, but it is not ideal for Chapter 13. Prepaid cards do not allow wage direct deposit in most cases, and they do not give the trustee a clear way to coordinate payments. A traditional bank account is simpler and more transparent. If you cannot open a bank account, discuss prepaid cards with your trustee first.