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Filing Ch 7 is $20,000 bank account exempt?

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  • Filing Ch 7 is $20,000 bank account exempt?

    My attorney says because we do not have any real estate/ mortgage, we can use our exemptions to protect our checking and savings accounts, which total around 20K. We live in Texas, and he says he will use federal exemption laws and not state. We are filing Chapter 7 due to credit cards and medical bills. We rent and have 2 vehicles that we are upside down on but keeping. I am really nervous about this. I am trying to educate myself on this exemption and wild card stuff in this short time before filing. The more I read, the more I become worried about losing this money. Can this money really be "off limits" and "protected" as our attorney says? Any advice is greatly appreciated!!

  • #2
    I didn't think Texas allowed a wildcard exemption.

    Comment


    • #3
      i am guessing that is why he said he would use federal and not state? but i am not finding anywhere showing you can protect cash. i am nervous about going any further with the process not knowing the answer. i will keep reading/researching

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      • #4
        This site has both Texas exemptions and Federal Exemptions for you to review:
        http://www.legalconsumer.com/bankrup...law.php?&ST=TX
        Filed CH 7 9/30/2008
        Discharged Jan 5, 2009! Closed Jan 18, 2009

        I am not an attorney. None of my advice is legal advice in any way..

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        • #5
          When you use the federal exemptions there is a wildcard and additional wildcard for unused homestead which is what your attorney is suggesting you use.

          I have a home, but the value allowed an extra 10,000 of wild card, if you don't have a home you should be allowed almost 20,000 of wild card, but that doesn't leave much for anything else. Spend some of the money on things you need. Not paying down debt or buying up assets.

          Ask you attorney if you can make a Roth IRA contribution for both you and your spouse for the year if you haven't already. Also make all your payments like electricity, water, sewer, phone, rent, etc for the month to minimize the balance. Get your car repairs done, like oil changes etc.

          if the trustee sees a lot of cash, it may be exempt, but it makes the trustee think they might be able to get some money out of you by objecting to other exemptions, etc. cash makes you a tempting target.

          This is not legal advice, ask your attorney, communicate with him or her, apparently he or she is not answering all your questions adequately, or you aren't asking.

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          • #6
            The federal wildcard exemption can be used to protect any property, according to the code - 11 USC 522(d) (5). Seems to me that money is property, but sounds like your attorney knows what they're doing.
            Case Closed > 2/08/2010

            Comment


            • #7
              The OP mentions `we' -- filing as a married couple with Federal exemptions, and with an unused homestead bumping up the wildcard, brings you up maybe over 40k given the married-doubling, I'd have thought. I've never seen any hint that cash isn't fine as a Federal wildcard exemption.

              One warning is that some banks have been known to freeze the account for a while during the bankruptcy process even if the cash will be all yours in the end.

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              • #8
                I have a question I haven't filed my taxes for 2009 and I am considering filing BK7 and I am wondering if my taxes are going to be taken. I usually get around 6K every year. I am a single parent and my income this year was pretty low due to an illness I had earlier this year. My car got repo today and I dont have anything of value. So I am wondering if my taxes are going to be taken by the Trustee!

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                • #9
                  That's an interesting question. I've seen other posts here that certainly suggest you might get your refund taken but I haven't read anything especially authoritative either way. I'd certainly plan for the possibility. (Well, I wouldn't - I owe the IRS a lot, there's no way they're sending me a check!)

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                  • #10
                    Originally posted by mzmetra View Post
                    I have a question I haven't filed my taxes for 2009 and I am considering filing BK7 and I am wondering if my taxes are going to be taken. I usually get around 6K every year. I am a single parent and my income this year was pretty low due to an illness I had earlier this year. My car got repo today and I dont have anything of value. So I am wondering if my taxes are going to be taken by the Trustee!
                    The answer to this question depends on a lot of things. Firstly, what state are you filing in? If you can use the federal exemptions you can potentially protect any prospective refund using the wildcard exemptions. $6K is more than the standard wildcard, but any unused homestead exemption of just over $10k can be applied to any asset (double that for married couples).
                    Case Closed > 2/08/2010

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