Bankrupts, who can’t pay their debts, will likely need to file for bankruptcy.
A federal bankruptcy judge in Michigan has issued a warning to banks, saying banks are not required to make sure the accounts are not subject to bankruptcy.
The filing is not expected to happen this week, but bankruptcy attorneys have been warning banks against filing for bankruptcy since at least 2010.
The warning was issued Tuesday by bankruptcy attorney Michael Lomax.
Lomax said he received the letter from the U.S. Bankrupt Claims Administrator’s Office in Washington.
He said that is a sign of a bank being in default.
Lomas told CNNMoney that a bank should consider a number of factors when filing for insolvency.
First and foremost, it is a good idea to ensure the account is in good standing.
Second, the bank needs to know that it will not be subject to the insolvencies provisions in the bankruptcy code.
Third, it needs to make certain that the account can be liquidated without the risk of having to repay the creditors, he said.