Question on State Exemptions

[treehugger1]

Perhaps someone can answer this question. Oregon lists "bank deposits up to $7500.00" in the exemption list? What does this mean? The reason for my question is that I will most likely file 13 early December. My paycheck is direct deposited into my bank accoutn on the last day of November or first day of December. I'm concerned that there will be money in my account when I file (I do have to pay bills for the month), and the trustee will seize this? Does the exemption statement refer to a direct deposit of my paycheck? I can ask my attorney next week, but I thought someone on this board might have an immediate or semi-immediate response. Thanks.

Tentative Filing Date: December 06

[lrprn]

Perhaps someone can answer this question. Oregon lists "bank deposits up to $7500.00" in the exemption list? What does this mean? The reason for my question is that I will most likely file 13 early December. My paycheck is direct deposited into my bank accoutn on the last day of November or first day of December. I'm concerned that there will be money in my account when I file (I do have to pay bills for the month), and the trustee will seize this? Does the exemption statement refer to a direct deposit of my paycheck? I can ask my attorney next week, but I thought someone on this board might have an immediate or semi-immediate response. Thanks.

Tentative Filing Date: December 06

"Bank deposits up to $7500" means you can have up to $7500 total in your checking and savings accounts on the day you file. (Nice that Oregon allows this!)

Just curious....if your direct deposit will force your accounts total to go over $7500, how about filing on November 29 or waiting until December 29 right before your direct deposit hits so your account will be under $7500 and all your bills for the month will be paid and cleared through?

[treehugger1]

Thanks for the reply. I wish I had to worry about account totals going over $7500. LOL Currently I have a negative balance in my checking account. I think I'm reading the Oregon law (Revised Statutes) incorrect. I think the $7500 refers to particulr types of "exempt" funds already on deposit. It looks as if the trustee could take everything if he/she wanted to. Oregon does not allow federal exemptions in bankruptcy, and the rules are quite cryptic to someone such as myself. I may have to wait and contact my attorney.

[treehugger1]

I spoke to soon, as I just found this ruling by a bankruptcy judge. The date is 2001 and there could be a followup ruling that overruled this. Comments, anyone?

http://www.orb.uscourts.gov/orb/newopinions.nsf/BDBEAC69D1820B9288256CAF007954AB/$file/PLATT.PDF?openelement


Thanks.

[lrprn]

I spoke to soon, as I just found this ruling by a bankruptcy judge. The date is 2001 and there could be a followup ruling that overruled this. Comments, anyone?

http://www.orb.uscourts.gov/orb/newopinions.nsf/BDBEAC69D1820B9288256CAF007954AB/$file/PLATT.PDF?openelement

Thanks.

Good find, TH! Reading this opinion, it looks like the bk judge is saying that in Oregon account deposits from work paychecks count under the $7500 exemption and aren't treated the same way as monies garnished through a judgment. I wasn't able to find any other rulings about accounts in Oregon after this one.

[HHM]

Basically, I read this opinion and statute as saying...

The money in your bank account that you wish to exempt must be directly traceable to wages and/or earnings. You will still lose 25% of that money...and you exemption cannot exceed $7,500.

These statutes and interpretations get a little tricky...i.e. what happens if you transfer money from your checking to your savings account...does it lose its classification as wages. What if you commingle funds...i.e. you have wages in your checking account in addition to other funds...i.e. gifts etc. And the big issue is the passage of time...how long can you really claim the exemption. However, for the average BK person, this typically doesn't matter because of the churn rate on their checking accounts (i..e money comes in, money goes out etc). However, I don't want to complicate matters to much.

The most common way to demonstrate that the money is wages is to show regular deposits (i.e. direct deposit being the best) from an employer or company. For example, if you have $2,500 in your checking account at the time you file BK and the ONLY deposits into the account are your paychecks...then under OR law (at least my reading of it) the trustee will get $625 (25%), and you will keep the rest.

HOWEVER, you asked this question under the chapter 13 thread...if you file a chapter 13, none of this matters (well, it only matters in so far as your chapter 13 plan must provide the creditors with AT LEAST as much as they would get if you filed chapter 7. The trustee is not going to take the money out of your account...but you just need to make sure you provide enough payments in the plan to cover the amount in question).

[treehugger1]

HHH, I read it the same way now that you mentioned the tie to the garnishment. It appears that Oregon exemptions for BK are the same used for procedural wage garnishments.

My biggest concern was related to filing immediately after a payday (I'm only paid once per month). It not as if I would have several $K in the bank, but I do need to make sure I can cover all my bills for December without fear of the trustee asking for it back when I get to the 341.

I didn't know about the BK 13 connection. But, it makes sense that should I be at 90% of payback over five years, a "little money in the bank" shouldn't affect things.

It seems as if everything is beginning to snowball and heading directly for BK 13. I keep thinking, "maybe there is away out," then the middle of this week, the car blows a head gasket. It is beginning to seem as if BK13 is my destiny.

[HHM]

In a chapter 13, I believe you have to make your first plan payment within 30 days of filing. But you will not have to worry about when you are paid. If it your case was going to be a Chapter 7, then you would want to wait until you bank account is very low (i.e. the day before payday), but in a chapter 13, it doesn't matter.

[lrprn]

If it your case was going to be a Chapter 7, then you would want to wait until you bank account is very low (i.e. the day before payday), but in a chapter 13, it doesn't matter.

It does matter in some states how much is in your accounts on the day you file Ch 13.

Our Ch 13 lawyer told us that it was best to have as little in our checking account as possible on the day of filing - he recommended less than $500 if we could manage it. That's because our state doesn't have an exemption for cash or deposit accounts. He said that if our trustee saw ready cash in an account, certainly anything over $1000, he would go after it and has in previous Ch 13 cases.

In Ch 13 it's important to check your state for allowed exemptions for cash and/or deposit accounts. If there is no exemption, then you want to have as little in your accounts as possible when you file. If there is an exemption, be sure the total amount in cash and accounts is less than the exemption allows on filing day.

[HHM]

I don't want to dispute your attorney, but strictly speaking, it SHOULDN'T matter; again, under a 13, the creditors must get at least as much through the chapter 13 plan as they would if the estate was liquidated and all "non-exempt" assets were sold to pay creditors. Thus, even if your state does not have an exemption for bank account funds, the trustee still can't take it so long as you plan can cover the liquidation value.

I think your attorney was just being cautious...it's pretty much standard BK attorney advice to say, "have as little in your checking account as possible when you file".

But you're right, rules vary from state to state so their may be some case law in your area that puts more issues in the mix.

[EmmaT]

Treehugger,
I don't understand your concern. Just don't file until you've paid your bills for the month, or take the money out in cash and buy money orders to pay your bills.
Emma

[CAB_44]

I do understand the concern that TH1 has about the monies in the account the day they file ie/ having money to pay bills that are due at the beginning of the month~ I had the same concern/question.
I know that some states do allow you to have more in your account than others.
One way to look at it is this~ Timing is everything, and if you can get out as much money as you can from your account then by all means DO SO~ I plan to NOT leave more than a few hundred in there on the day that I file~
I also think it's important what day of the month that you file.... that is....
if most of my bills are due on the first, I will NOT file on that day~ since they do go 30 days from that date....then I am under the assumption they will take the paycheck that comes due closest to your file date....
I figure they will probably take both of my husbands direct deposits on that particular payday..... leaving us with a whopping 100.00 left of a 2300. total deposit....
makes me want to be sick~

so naturally if I am looking at a once a month paycheck~ I need it to be as close to when all of my bills are mostly due.....so I will not file on the first, but probably on the second paycheck deposit...
I guess you could have it divided bi monthly, but I think I would want it to be taken out all at once.....
I get paid daily~ never knowing what my pay will be daily as I work by appointment~...I only know tentitively what my day will gross~ so it does allow me to have money in my pocket almost everyday of the week....it's just the not knowing HOW MUCH....that scares me...
I just think that as long as you are not in a hurry to file, you should plan out when the best time of the month (hahaha if there is such a thing) to file would be....
am I right on this guys?!

[treehugger1]

I think HHM is correct on this call. My attorney has said the truste does not care about what was going on prior to filing (other than I haven't ran up any llarge luxury debts in 60 - 70 days prior to filing, no large cash advances on credit cards, no preferential payments exceeding $600 90 days prior to filing, etc). I am a bit nervous about withdrawing $2K to $3K out of my checking account a few days prior to filing, so I think I'll make the payments I need to make, remove my essential living expense money, and let the remainder sit. I will be very close to 100% in a 13 over 5 years (no inbetween 3 and 5 years in this district), so even if the trustee couldvtake the money, my overall debt is so high, I doubt a 2k - 3k reduction in overall debt would affect my payment by more than $15 - $20 per month, if that.