Learn what I did about choosing a bankruptcy lawyer here, or skip ahead to find out about Bankruptcy and Paypal.
Wanna know what happens to your PayPal account when you file bankruptcy? I did and it was one of the few pieces of bankruptcy information that I couldn't find prior to filing.
I was very concerned about my PayPal account when I filed bankruptcy because I'd been selling on eBay for years and needed to be able to continue using my PayPal account or I wasn't going to have any money at all coming in. I also had PayPal Buyer Credit (not sure that still exists) through GE Money Bank.
I paid off the PayPal Buyer Credit account prior to filing because I didn't want it to harm the regular PayPal account. I also kinda wanted to keep my PayPal buyer credit. My bankruptcy attorney said I didn't need to but I was paranoid. Since the balance was under 600.00, this was not a preferential payment. However, paying that bill was like throwing that money down the drain since all my debts were discharged and GE Money Bank closed my PayPal Buyer Credit Account anyway.
In fact, they also added themselves to my creditor matrix (yes, even though I owed them nothing at this point) and this ended up delaying my bankruptcy discharge. I called them when they did this and tried to straighten it out but they wouldn't talk to me because of the automatic stay...I tried telling them that YES, they could talk to me because I did not owe them anything but it fell on deaf ears.
They said to have my lawyer call them but I didn't. (I should have but when you're in the middle of bankruptcy, things get overwhelming and sometimes you just don't want to deal with stuff, even though you should) Eventually someone at GE Money Bank figured out their mistake and they withdrew themselves from my bankruptcy. My discharge followed.
Anyway, I am happy to report that nothing happened to my PayPal account or my PayPal debit card. PayPal is actually a money transfer service, not a bank account.
Also worth mentioning is that the bankruptcy trustee never asked to see any PayPal statements or documentation, but I suppose he could have, so be ready to share that information if requested to do so. As long as you are doing everything on the up and up, you should have nothing to worry about.
And, as always, consult with a bankruptcy attorney to determine what needs to be done in your own, unique bankruptcy.
Wishing a fresh start to all who need it,