Recovering Safe Deposit Boxes After Bank Bankruptcy

Several banks have recently filed for bankruptcy. What to do with your safe deposit box depends on a few factors. The first thing to do is determine whether your bank is on the “watch list” and is in danger of failing.

Check the Bank Watch List

Many agencies are currently maintaining bank watch lists to discourage people from opening accounts with banks that may be close to  insolvency. Check several of these lists, including the one made available on the FDIC (Federal Deposit Insurance Corporation) website, to see if your bank is listed. If it appears on more than one list, it is a candidate for a buyout or bankruptcy.

If Your Bank IS NOT On the Watch List

Start to pay a little more attention to your bank's activities, anyway.

  • Learn as much as you can about its history, policies, domestic and foreign investments. Many banks have made poor decisions with their investments.
  • Monitor your bank’s stock market rating. If it is small but profitable, it may become a candidate for a takeover or buyout.

If Your Bank IS On the Watch List

Speak to the bank manager at once about the safety of your deposits.

  • If you have more than $250,000 deposited in one institution, begin to remove the excess amount. Transfer at least some of the funds to different banks. FDIC now insures depositors for $250,000, for each separate bank account. Be sure the new bank you choose it also FDIC insured.
  • Make arrangements to empty and close out your safe deposit box. You should schedule the appointment as quickly as possible because you are responsible for the items in your safe deposit box. FDIC provides no insurance, and pays no compensation claims, for the contents of safe deposit boxes.
  • Within 30 days of the bank filing for bankruptcy, you will get a written notice about the event, and you will be asked to come to the bank and empty out your safe deposit box.

Once Your Bank is closed

If you have not yet recovered your safe deposit box, it will be drilled open by bank personnel and emptied. Information about ownership of the box, and the items contained therein, will go on a list at your state's Unclaimed Property Office, usually under the jurisdiction of the State Treasury Department.

You will need to contact the Unclaimed Property Office and schedule an appointment. Any delay will result in the items being sold at auction. All you will be able to recover is the monetary proceeds of the sale. Personal papers and unsellable items will be shredded or destroyed. 

Closing your safe deposit box for a few months till your bank is stable again is worth the inconvenience because you can lose everything otherwise.