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    Bank Accounts - How much is safe?

    How much money is safe to keep in your savings and checking when entering BK? Should I decide to move forward with a BK, an attorney recommended that I pre-pay a year's worth of insurance (car and renter's) in order not to lose the good credit discount that I currently have. This would wipe out some of my money in my checking and savings account, but I'm wondering how much would be safe to leave in an account. For example, I have 2 accounts right now that have $100 each in them. Just wondering if they would leave those or would I lose that money? Not really sure how this works. I was in the process of switching to a new bank so I opened 2 accounts at the new bank with $100 each just to get started before I get all my auto-pays and direct deposit changed.

    #2
    It depends on how much cash your state allows you to exempt.

    Comment


      #3
      It depends on your state's exemptions, and what exemptions you'll use on other things. I can give you an example based on GA (my state) since I don't really know about Kansas. Here, a single individual can claim $600 as a wild card exemption. And $10,000 in home equity, but any unused home equity exemption up to $5,000 can be used as an additional wild card. Not so surprisingly - I have no home equity. These exemptions are in addition to exemptions for an automobile, household items and such.

      What this means is I can use those wild card exemptions on cash (or money in the bank) or any other items that don't have specific exemptions. Or items that are worth more than the specific exemptions allow. Such as the exemption for jewelry is $500 and automobile is $3500. If my wedding ring was worth $1200 and car had $5000 of equity, then I'd use some of the wild card to protect the overage on these items ($700 on the ring, $1500 on the car) leaving $3400 remaining.

      Research your state's exemptions. Is there a wild card or a specific exemption that protects some cash/funds on hand? If not - you'll want your bank & cash balances to be as low as possible on the day you file.

      Whether or not you want to prepay your insurance, etc. all depends on your situation. If you are a clear cut chapter 7 case, and can easily show that you have no DMI it might not be an issue. But if you prepay some bills for a year +, then you may need to remove those from your monthly budget. If that frees up enough DMI to force you into a ch. 13 then it might not be a good move. On the other hand, there are some things you can spend money on now that should not affect your budget. Such as attorneys fees, any home or car repairs/maintenance you've been putting off, medical you might need to attend to, and so on.
      ~Staci
      Not an attorney, and never played one on tv. My responses are based on my own experiences & personal opinions.)

      Comment


        #4
        Originally posted by SMinGA2 View Post
        It depends on your state's exemptions, and what exemptions you'll use on other things. I can give you an example based on GA (my state) since I don't really know about Kansas. Here, a single individual can claim $600 as a wild card exemption. And $10,000 in home equity, but any unused home equity exemption up to $5,000 can be used as an additional wild card. Not so surprisingly - I have no home equity. These exemptions are in addition to exemptions for an automobile, household items and such.

        What this means is I can use those wild card exemptions on cash (or money in the bank) or any other items that don't have specific exemptions. Or items that are worth more than the specific exemptions allow. Such as the exemption for jewelry is $500 and automobile is $3500. If my wedding ring was worth $1200 and car had $5000 of equity, then I'd use some of the wild card to protect the overage on these items ($700 on the ring, $1500 on the car) leaving $3400 remaining.

        Research your state's exemptions. Is there a wild card or a specific exemption that protects some cash/funds on hand? If not - you'll want your bank & cash balances to be as low as possible on the day you file.

        Whether or not you want to prepay your insurance, etc. all depends on your situation. If you are a clear cut chapter 7 case, and can easily show that you have no DMI it might not be an issue. But if you prepay some bills for a year +, then you may need to remove those from your monthly budget. If that frees up enough DMI to force you into a ch. 13 then it might not be a good move. On the other hand, there are some things you can spend money on now that should not affect your budget. Such as attorneys fees, any home or car repairs/maintenance you've been putting off, medical you might need to attend to, and so on.
        I didn't realize it was a state thing. Thanks. I can't imagine I'd have much of a problem, but was just curious. I suspect my car needs new brakes so I guess that will help.

        Comment


          #5
          also remember this.

          our state only allowed cash of $150 in your bank account. however, on our date of our 341 we had over 2k in there since none of the bills had been paid for the month. not a word was said because our six months worth of bank statements showed the deposits and withdrawals consistent each month. actually, during that six month time period i made certain to buy everything via checks and debits so there was an excellent accountability and a way to prove to the court where every dime went monthly.

          if, and i'm certain the trustee's office did do the math and took the deposits against the amounts withdrawn for bill paying the bottom cash result would have most likely been $7. my long point being it's not so much what's there on a certain date, it's what's there after you pay your bills. at least that was the way it worked for us.
          8/4/2008 MAKE SURE AND VISIT Tobee's Blogs! http://www.bkforum.com/blog.php?32727-tobee43 and all are welcome to bk forum's Florida State Questions and Answers on BK http://www.bkforum.com/group.php?groupid=9

          Comment


            #6
            Tobee43, I disagree - but ultimately its best to discuss this with one's attorney. Whatever cash, accounts, etc. you have in your possession at the time of filing can be considered as part of the bankruptcy estate. If you can't exempt it, the trustee has the right to ask for it. Will they? Don't know. Local attorneys will know better what to expect from their local trustees.

            If your attorney says not to have much on hand, then don't count on being able to rationalize w/ the trustee why you should be able to keep the $.

            What you have in your accounts on your 341 date is not the issue...
            ~Staci
            Not an attorney, and never played one on tv. My responses are based on my own experiences & personal opinions.)

            Comment


              #7
              Looking up KS exemptions, though I can't guarantee the site I landed on is up to date:

              Home - any value
              Clothing to last 1 year
              Food & fuel to last 1 year
              Funeral plan prepayments
              Furnishings & household equipment (no amount stated)
              Jewelry and clothing up to $1,000
              Motor vehicle up to $20,000
              Tools of trade up to $7,500
              Wild card NONE

              No wild card, so no way to specifically exempt cash. But most of the other exemptions are fairly generous. So there are ways you could spend cash down, to your own benefit, on exempt items.
              ~Staci
              Not an attorney, and never played one on tv. My responses are based on my own experiences & personal opinions.)

              Comment


                #8
                Originally posted by SMinGA2 View Post
                Tobee43, I disagree - but ultimately its best to discuss this with one's attorney. Whatever cash, accounts, etc. you have in your possession at the time of filing can be considered as part of the bankruptcy estate. If you can't exempt it, the trustee has the right to ask for it. Will they? Don't know. Local attorneys will know better what to expect from their local trustees.

                If your attorney says not to have much on hand, then don't count on being able to rationalize w/ the trustee why you should be able to keep the $.

                What you have in your accounts on your 341 date is not the issue...
                i can't argue this this point as it actually happened. also it's common sense if you are using your checking account to pay all your expenses. this was not cash on hand, this was a true accounting of our income and out put and actually it was mentioned that it made the trustee's office very happy to have clear cut record keeping.

                the way it was put to us was on the day of your 341 you cannot have more than $150.

                what exactly is cash on hand??? what is a person suppose to do, go run and take all their bill paying monies out of their accounts? now that would be suspicious, and also not realistic on anyones terms. trustees know one pays their rent, electric, gas, food medical etc... that would look terrible. again, we had no problem with using this approach, and it was actually the only money we had anyway, no other bank accounts etc.

                also, you must note that we had much communication with our trustee's office prior to our 341. this was just a non-issue.
                Last edited by tobee43; 05-16-2012, 06:18 AM.
                8/4/2008 MAKE SURE AND VISIT Tobee's Blogs! http://www.bkforum.com/blog.php?32727-tobee43 and all are welcome to bk forum's Florida State Questions and Answers on BK http://www.bkforum.com/group.php?groupid=9

                Comment


                  #9
                  Your example referred to your bank account balance as of your 341, not time of filing.

                  I wasn't aware trustees were expected to follow common sense and act in the filer's best interest. My understanding is they represent creditors.

                  Again: if you have no wild card for cash/bank account funds discuss with your attorney how to handle. Might be in your best interest to schedule your filing after bills are paid/just before the next direct deposit.

                  Originally posted by tobee43 View Post
                  i can't argue this this point as it actually happened. also it's common sense if you are using your checking account to pay all your expenses. this was not cash on hand, this was a true accounting of our income and out put and actually it was mentioned that it made the trustee's office very happy to have clear cut record keeping.
                  ~Staci
                  Not an attorney, and never played one on tv. My responses are based on my own experiences & personal opinions.)

                  Comment


                    #10
                    We were told to have as close to 'zero' in our checking account, as possible, on the day we filed. We were actually a little overdrawn. Nothing was said about money in the account on the day of the 341. And on the day we filed, 'Hub and I had probably about $25.00 in change between us in our wallets.

                    Some folks run into trouble when they don't watch their filing dates, and a direct deposit paycheck hits the account on the day they file.
                    "To go bravely forward is to invite a miracle."

                    "Worry is the darkroom where negatives are formed."

                    Comment


                      #11
                      Originally posted by SMinGA2 View Post
                      Tobee43, I disagree - but ultimately its best to discuss this with one's attorney. Whatever cash, accounts, etc. you have in your possession at the time of filing can be considered as part of the bankruptcy estate. If you can't exempt it, the trustee has the right to ask for it. Will they? Don't know. Local attorneys will know better what to expect from their local trustees.

                      If your attorney says not to have much on hand, then don't count on being able to rationalize w/ the trustee why you should be able to keep the $.

                      What you have in your accounts on your 341 date is not the issue...
                      We haven't encountered this yet but are soon going to file. I know we discussed this in our consult and again when I went to drop off some paperwork yesterday. I actually spoke with the paralegal yesterday regarding some questions on the paperwork. Anyway, I asked about filing dates as we are trying to do this asap and the amount of money in the checking account. We are hoping to file on the day before hubby's check gets direct deposited into the account. Although we can exempt money up to a certain point, we have been advised to have a low checking balance on the day we file.

                      Comment


                        #12
                        Originally posted by SMinGA2 View Post
                        Your example referred to your bank account balance as of your 341, not time of filing.

                        I wasn't aware trustees were expected to follow common sense and act in the filer's best interest. My understanding is they represent creditors.

                        Again: if you have no wild card for cash/bank account funds discuss with your attorney how to handle. Might be in your best interest to schedule your filing after bills are paid/just before the next direct deposit.

                        actually, the trustee is not suppose to be for either. they are suppose to be "fair" and follow the guidelines of the laws they enforce. our trustee was more than "fair" and show definite signs of having some common sense...but then again she was a woman LOL!!! (JUST KIDDING!!!)

                        actually SM it was both or actually the same balances every month at the time of filing as well as the 341, but we were actually told at the 341 to have only the $150 in the bank. don't have a clue why.

                        i can clearly understand your point angelina on filing date not to have large sums of money in one's account. we didn't have to worry about that since all we every had was ss, pension and at the time unemployment insurance.
                        8/4/2008 MAKE SURE AND VISIT Tobee's Blogs! http://www.bkforum.com/blog.php?32727-tobee43 and all are welcome to bk forum's Florida State Questions and Answers on BK http://www.bkforum.com/group.php?groupid=9

                        Comment


                          #13
                          Originally posted by tobee43 View Post
                          also remember this.

                          our state only allowed cash of $150 in your bank account. however, on our date of our 341 we had over 2k in there since none of the bills had been paid for the month. not a word was said because our six months worth of bank statements showed the deposits and withdrawals consistent each month. actually, during that six month time period i made certain to buy everything via checks and debits so there was an excellent accountability and a way to prove to the court where every dime went monthly.

                          if, and i'm certain the trustee's office did do the math and took the deposits against the amounts withdrawn for bill paying the bottom cash result would have most likely been $7. my long point being it's not so much what's there on a certain date, it's what's there after you pay your bills. at least that was the way it worked for us.
                          This was the way our atty explained it to us also. He said it didn't matter so much the amount as long as we could show that it was 'money in, money out' sort of thing. However.... it really depends on your trustee so be sure your atty knows your trustee well enough to be able to say what it or is not expected.
                          Filed Ch 13 Feb 9, 2012, 341 meeting Mar 15, 2012, Confirmed Apr 5, 2012
                          Anticipated freedom party Apr 2015

                          Comment


                            #14
                            Originally posted by TheBajan View Post
                            This was the way our atty explained it to us also. He said it didn't matter so much the amount as long as we could show that it was 'money in, money out' sort of thing. However.... it really depends on your trustee so be sure your atty knows your trustee well enough to be able to say what it or is not expected.
                            yes, i think that's very true. our firm seem to have known this trustee well and had an excellent relationship with her...thank heavens for us, i guess!
                            8/4/2008 MAKE SURE AND VISIT Tobee's Blogs! http://www.bkforum.com/blog.php?32727-tobee43 and all are welcome to bk forum's Florida State Questions and Answers on BK http://www.bkforum.com/group.php?groupid=9

                            Comment


                              #15
                              Originally posted by SMinGA2 View Post
                              Looking up KS exemptions, though I can't guarantee the site I landed on is up to date:

                              Home - any value
                              Clothing to last 1 year
                              Food & fuel to last 1 year
                              Funeral plan prepayments
                              Furnishings & household equipment (no amount stated)
                              Jewelry and clothing up to $1,000
                              Motor vehicle up to $20,000
                              Tools of trade up to $7,500
                              Wild card NONE

                              No wild card, so no way to specifically exempt cash. But most of the other exemptions are fairly generous. So there are ways you could spend cash down, to your own benefit, on exempt items.
                              I guess I'm an idiot or something, but I'm not sure exactly what is meant by "clothing to last one year." Are they really going to itemize what's in my closet or are we talking about what money I would spend on clothing in a year? I guess the same would apply to a couple of these other categories.

                              Thanks.

                              Comment

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