Paypal Accounts and Chapter 13

[kornellred]

I have a Paypal account into which gets deposited small amounts of money earned from eBay auctions. The amounts are trivial, and I always use the money in the account to buy other things on eBay related to my hobby interests.

I never mentioned this to my BK attorney, and I have not seen any discussions dealing with Paypal transactions in any forums that I pay attention to.

Could this be an issue with the trustee?

Willie R.

[MajorMike]

how small are we talking?

[southerncomfort]

I have the same. I really wouldn't worry about it! Majormike might disagree, but I do not think the trustee's office has an employee scanning Paypal accounts!

[epiphany]

I have the same. I really wouldn't worry about it! Majormike might disagree, but I do not think the trustee's office has an employee scanning Paypal accounts!

I think that a paypal account might be considered a bank account. This is something I am wondering about too. I often get paid with paypal and am able to transfer the money to another bank account, use the paypal debit/mc card for purchases, or withdraw money from the ATM. I would think that the amount of money flowing through this account would probably be a major consideration as to whether it is ignored or not.

Your activity sounds like it is smaller than mine, and I really wouldn't worry about it either, but I'd rather disclose everything than to have something come back and bite me in the butt.

EP

[One Half Full]

can you still have a paypal account without a charge card? I'm going to have to look at that.

[kornellred]

Usually, less than $200 is in my Paypal account at any given time.

You can have a Paypal account without a credit card on file, as long as you have a bank account. In that case, when you pay someone with Paypal, it is called an "echeck" and the recipient does not get paid until the funds have cleared out of your bank account.

I suppose it would be wise to at least mention the existence of my Paypal account to my attorney. My Chapter 13 filing date is fast approaching.

WR

[Flamingo]

Usually, less than $200 is in my Paypal account at any given time.

You can have a Paypal account without a credit card on file, as long as you have a bank account. In that case, when you pay someone with Paypal, it is called an "echeck" and the recipient does not get paid until the funds have cleared out of your bank account.

I suppose it would be wise to at least mention the existence of my Paypal account to my attorney. My Chapter 13 filing date is fast approaching.

WR

To the OP - a Paypal account is considered a bank account inasmuch as to open one, you have to provide a bank account number and routing number from which to transfer funds. A tracer was sent to your bank account (savings/checking) when you opened your PayPal account to ensure you had a valid bank account from which they could obtain funds or send transfer of funds to. Disclose to your attorney as it is linked to your bank account.

[EveryDayAdam]

I paypal account is NOT a bank account. In order for it to be a bank account, PayPal would need to have a bank charter, which they do not. Also, PayPal doesn't loan money. (there is a paypal credit card, but it is issued through monogram bank, and not issued directly by paypal).

However, it is considered an asset, since the money in your account has a cash value.

It always made me wonder: If money in a PayPal account would be difficult for a creditor with a judgement to find, since it's not a bank account. They wouldn't be subject to bank levies.

[NewHope]

I did not have a problem with either Ebay or Paypal, as they are not considered regular positive income. Both my Attn and Turstee was made aware and have had no problems.

Good Luck

[Flamingo]

I paypal account is NOT a bank account. In order for it to be a bank account, PayPal would need to have a bank charter, which they do not. Also, PayPal doesn't loan money. (there is a paypal credit card, but it is issued through monogram bank, and not issued directly by paypal).

However, it is considered an asset, since the money in your account has a cash value.

It always made me wonder: If money in a PayPal account would be difficult for a creditor with a judgement to find, since it's not a bank account. They wouldn't be subject to bank levies.

Whoops! Sorry, worded that first sentence badly. What I meant to say that since it is tied into your bank account and the only way you can get money out of there is through a deposit to your bank account listed with them, it is considered a way to pay bills like a debit card. You can also purchase services and other items just like a credit card but you have to have money deposited into there for that purpose and where does that come from? Your bank account. So it is a traceable account listed to your bank account which can easily be found by a Trustee unless you don't use it for several months prior to filing. I have one and also have the PayPal credit account through GE Money Bank which I access through PayPal.

[sore looser]

Flamingo that is incorrect..you do NOT have to transfer withdraws to your bank account...you can use your Pay Pal debit card to withdraw funds

[epiphany]

Flamingo that is incorrect..you do NOT have to transfer withdraws to your bank account...you can use your Pay Pal debit card to withdraw funds

That's true. Or you can purchase stuff with your card from the funds that are already in there...no need to dip into your bank account.

I have done some more digging on this subject and the official word from the paypal user agreement:

You acknowledge that (i) PayPal is not a bank and the Service is a payment processing service rather than a banking service, and (ii) PayPal is not acting as a trustee, fiduciary or escrow with respect to your funds, but is acting only as an agent and custodian.

I also learned that PayPal uses Wells Fargo to process the payments and am hoping that my BK on my Wells loan does not affect my PayPal account. I am paying off my PayPal GE Buyer credit in hopes to avoid this (just under what would be considered a preferential payment) but there is no way I can pay off Wells Fargo too. And I need to be able to accept PayPal!

EP

[Flamingo]

Flamingo that is incorrect..you do NOT have to transfer withdraws to your bank account...you can use your Pay Pal debit card to withdraw funds

Remember, the key here is that PayPal is linked to either your checking/savings account or another credit card. In order to open a PayPal account, you have to have one or the other which is utilized as a back up in case you don't have the money in your PayPal account (i.e., for use on it's debit card). There is a link that can be traced and that is all I am trying to state. I have had PayPal for a number of years due to eBay purchases and it is linked to my checking account and I have the PayPal GE Money Bank credit line tied to it also for payment.

[southerncomfort]

Remember, the key here is that PayPal is linked to either your checking/savings account or another credit card. In order to open a PayPal account, you have to have one or the other which is utilized as a back up in case you don't have the money in your PayPal account (i.e., for use on it's debit card). There is a link that can be traced and that is all I am trying to state. I have had PayPal for a number of years due to eBay purchases and it is linked to my checking account and I have the PayPal GE Money Bank credit line tied to it also for payment.

Yes, you do provide your checking account information as a back-up when you sign up for paypal. However, this mysterious 'link" you keep referring to does not exist. There is nothing anywhere that is going to pull up the "LINK" you or I or anyone posting here has to paypal via their checking account. I have the same "LINK" with all of the companies that I pay electronically like my satellite bill, my phone bill etc.

According to your theory, the trustee has some magical power to seize your checking account which is somehow going to give him/her this magical LINK of information that I signed up at paypal over ten years ago. Not going to happen!

[Catia]

Hmm, this brings up some really important and interesting food for thought.
One point I would like to stress is that if the account is old (mine is), the trustee may not see any link to paypal at all...this is like "lighting a candle and saying a prayer"...If you use paypal a lot, some transactions can be traced, in ways you may not have thought about--and the trustee is in fact "auditing your financial records" to a large extent. So there is some risk involved in NOT disclosing it. While the risk maybe small, it is a risk.
For instance, lets say you always paid for certain services on credit cards, or bank account, using whatever specific account on a regular basis. Then all of a sudden that service started using paypal as a way to get paid--and you used paypal to pay them--it would reflect on your statement that it received pymt via paypal. This might be one of the types of "inconsistencies" a trustee may want to explore. A CC bill that has pymts applied from paypal, and/or a bank statement that shows a transfer TO OR FROM your bank account--trustees know to look for online business accounts, they are aware of ebay and etc, and it is still a liquidatable asset if there is a cash value to it, no matter how small.
However, if you can go through every cretit card and bank statement you have for each month for the past 10 years and be POSITIVE nothing shows any paypal tranactions to or from, well, maybe you have no worries.
Believe me, I am questioning the same thing, and debating it. I am just gonna disclose it, cuz a lousy couple of hundred dollars of transactions over 8 years is not worth the risk of getting in trouble and bringing me under more investigation of a trustee. My bank statements do show transfers to/from paypal when I have used their services. Particularly when I had to sell a few items and pull the cash out of paypal into my bank account. It is not "virtual cash"--it is actual cash...And as far as I know, their credit cards show this too.