Paypal Accounts and Chapter 13

[Flamingo]

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!

Please note I totally get your point but this "link" I am referring to is/are transactions from Paypal to/from your checking and/or savings account. Many trustees require several months of bank statements prior to one filing Bankruptcy. Not by magic, there could be transctions to/from your Paypal account which would show you do have the account if you do not, on purpose, disclose it. Your links to your electric, phone or gas bills for payment is not the same point as in this discussion. We had to provide one year of bank statements to our Trustee (checking and savings) prior to our filing. Note also that if you have any other accounts (debit, credit card, etc.) lined up in Paypal, you have to list a back up card in case you make a purchase or payment in PayPal and the amount in there is not sufficient to cover the transaction. That amount would come from whatever you have listed in there and it will not be an account with Paypal; it has to be a checking or credit card. So if one makes a payment out of Paypal and for some reason there are not enough funds in the paypal account for that transaction, Paypal will go to the backup listed (checking account, etc.) to get the rest of the funds. So a transaction will show up on your checking account statement from Paypal showing you have an account.

There is nothing mysterious or magic about this - I think the point I am trying to make that if someone wants to hide their PayPal account for making money on eBay or outside the realm of the Trustee's view, and wants to file BK, there can be transactions showing on bank statements to mess that up. While it may not happen with one person, it can happen to the other. Some Trustees snoop through every nook and cranny. Other's don't.

[southerncomfort]

Please note I totally get your point but this "link" I am referring to is/are transactions from Paypal to/from your checking and/or savings account. Many trustees require several months of bank statements prior to one filing Bankruptcy. Not by magic, there could be transctions to/from your Paypal account which would show you do have the account if you do not, on purpose, disclose it. Your links to your electric, phone or gas bills for payment is not the same point as in this discussion. We had to provide one year of bank statements to our Trustee (checking and savings) prior to our filing. Note also that if you have any other accounts (debit, credit card, etc.) lined up in Paypal, you have to list a back up card in case you make a purchase or payment in PayPal and the amount in there is not sufficient to cover the transaction. That amount would come from whatever you have listed in there and it will not be an account with Paypal; it has to be a checking or credit card. So if one makes a payment out of Paypal and for some reason there are not enough funds in the paypal account for that transaction, Paypal will go to the backup listed (checking account, etc.) to get the rest of the funds. So a transaction will show up on your checking account statement from Paypal showing you have an account.

There is nothing mysterious or magic about this - I think the point I am trying to make that if someone wants to hide their PayPal account for making money on eBay or outside the realm of the Trustee's view, and wants to file BK, there can be transactions showing on bank statements to mess that up. While it may not happen with one person, it can happen to the other. Some Trustees snoop through every nook and cranny. Other's don't.

The situation you are referring to is no diffferent than using your checking account debit card to make a purchase at Target or any other retail establishment. Again, the fact that you debited money out of your checking account to pay an ebay invoice (or any other internet retailer that takes paypal) is no different than your ordinary run of the mill transaction at a local B&M retailer. Yes, if you are depositing your ebay earnings in your checking account the trustee might inquire as to the source of those funds. If you don't, however, and instead use the paypal debit card or recylcle the money back to to Ebay or other internet retailers, I don't think a debtor has anything to be worried about.

[Flamingo]

The situation you are referring to is no diffferent than using your checking account debit card to make a purchase at Target or any other retail establishment. Again, the fact that you debited money out of your checking account to pay an ebay invoice (or any other internet retailer that takes paypal) is no different than your ordinary run of the mill transaction at a local B&M retailer. Yes, if you are depositing your ebay earnings in your checking account the trustee might inquire as to the source of those funds. If you don't, however, and instead use the paypal debit card or recylcle the money back to to Ebay or other internet retailers, I don't think a debtor has anything to be worried about.

I understand what you are trying to say and do and you are saying it to comfort yourself as to your own situation because it works for you. While you state it will work for you and that is fine, it may not work for someone else. There is always a risk factor when one tries to hide anything from a trustee and it can always come up and bite them later on even though they think it is not an issue. Advocating otherwise is not a good idea. A debtor always has something to worry about if they are trying to eliminate or cover up any financial resource in filing a bankruptcy. The main risk factor is just prior to filing (six months to one year prior). After that and after one files, the risk is basically eliminated as to any PayPal account tied into a checking account unless someone rats to your attorney or trustee that you are making a bundle on the side. There are lots of people on eBay trying to make money to survive a 13 or just trying to get extra money to get by. I'm sure every Trustee in America is aware of it and probably as time goes on they may make more efforts to check on accounts such as PayPal.

[southerncomfort]

I understand what you are trying to say and do and you are saying it to comfort yourself as to your own situation because it works for you. While you state it will work for you and that is fine, it may not work for someone else. There is always a risk factor when one tries to hide anything from a trustee and it can always come up and bite them later on even though they think it is not an issue. Advocating otherwise is not a good idea. A debtor always has something to worry about if they are trying to eliminate or cover up any financial resource in filing a bankruptcy. The main risk factor is just prior to filing (six months to one year prior). After that and after one files, the risk is basically eliminated as to any PayPal account tied into a checking account unless someone rats to your attorney or trustee that you are making a bundle on the side. There are lots of people on eBay trying to make money to survive a 13 or just trying to get extra money to get by. I'm sure every Trustee in America is aware of it and probably as time goes on they may make more efforts to check on accounts such as PayPal.

Acutally not. What I am saying is the practical reality--not some pipe dream I made up to comfort myself. What YOU are saying is the extreme situation. You seem to be of the opinion that if you earn $20 one day babysitting your neighbor's kid, you better run and get a W-2 and send a certified letter to your Trustee alerting him as to your new found income. I am saying that the trustee really doesn't care about miniscule transactions.

I find it interesting that you are so overly cautious, yet, you somehow managed to find yourself in a Chapter 13. Seems that if you had been as cautious as you claim to be now, you wouldn't have ever found yourself in the situation to begin with.

[Flamingo]

Acutally not. What I am saying is the practical reality--not some pipe dream I made up to comfort myself. What YOU are saying is the extreme situation. You seem to be of the opinion that if you earn $20 one day babysitting your neighbor's kid, you better run and get a W-2 and send a certified letter to your Trustee alerting him as to your new found income. I am saying that the trustee really doesn't care about miniscule transactions.
I find it interesting that you are so overly cautious, yet, you somehow managed to find yourself in a Chapter 13. Seems that if you had been as cautious as you claim to be now, you wouldn't have ever found yourself in the situation to begin with.

You are missing the entire point of this thread and that is all I am stating - it is not about you but you are entitled to your opinion. What this thread is based on is whether or not one should bring a Paypal account to the Trustee's attention. Under the Code, if thre is money in a PayPal account it is considered an asset and money to which the debtor has access. To withhold that information from the Trustee is a risk one must take and determine whether or not it is worth it. While some may get away with it, others may not because there is always a risk of discovery. It is never good to advocate withholding any information from the Trustee and being cautious as to one's financial affairs is a good thing especially when dealing with a Court of Law. We are all here due to filing or considering BK, including yourself. I never would have thought of throwing someone else's BK in their face in answer to any posting.

[southerncomfort]

You are missing the entire point of this thread and that is all I am stating - it is not about you but you are entitled to your opinion. What this thread is based on is whether or not one should bring a Paypal account to the Trustee's attention. Under the Code, if thre is money in a PayPal account it is considered an asset and money to which the debtor has access. To withhold that information from the Trustee is a risk one must take and determine whether or not it is worth it. While some may get away with it, others may not because there is always a risk of discovery. It is never good to advocate withholding any information from the Trustee and being cautious as to one's financial affairs is a good thing especially when dealing with a Court of Law. We are all here due to filing or considering BK, including yourself. I never would have thought of throwing someone else's BK in their face in answer to any posting.

Sorry, but I have read many of your posts elsewhere on this board and you often come off as being very smug and holier-than-thou. You are not the authority on the Bankruptcy Code. If you had any idea how the law or legal system works, you would know that any code/statute/law is subject to interpretation. So, for you to make these blanket statements urging others what to do is rather annoying. But, I will leave it that.

Good day!

[Flamingo]

Sorry, but I have read many of your posts elsewhere on this board and you often come off as being very smug and holier-than-thou. You are not the authority on the Bankruptcy Code. If you had any idea how the law or legal system works, you would know that any code/statute/law is subject to interpretation. So, for you to make these blanket statements urging others what to do is rather annoying. But, I will leave it that.

Good day!

I would think you come across as the same with telling someone in a BK forum that they lacked caution and should have known better not to put themselves in a position to file BK! There is a difference between "holier than thou" (which I am far from) and "staying out of trouble." Many people come here looking for help/advice and if someone tells them that it is OK, they could get in trouble if they are looking to hide something from the Trustee. Now, the OP wanted to know if his PayPal account could be an issue with the Trustee (review original posting). Yes it can be an issue. Does stating that make me "holier than thou?" I don't think so.

Let me give you a situation as to being cautious as to advice on a BK forum...prior to our filing in 2002, we were advised by people in another forum to try not to file and to use all our savings because filing was a bad thing. We used my husband's 401(k) when we should have been more cautious and got better advice. We found out after the fact and way too late that we could have saved those funds. There are many of us on this forum that will state it is good to be cautious and avoid risk. Why? Cause we have been there.

I work in the legal system though I am not a lawyer and never contended to be one so I do know how the system works but an asset is an asset and it would take quite a bit of legal wrangling to have a trustee determine otherwise. I am done with this. I am glad you have your PayPal account (I have one also as do lots of folks during BK) but the window I was focusing on with this thread was the time before filing where the transactions to/from the account could be caught by a Trustee. As I state above, an asset is an asset.

[southerncomfort]

I would think you come across as the same with telling someone in a BK forum that they lacked caution and should have known better not to put themselves in a position to file BK! There is a difference between "holier than thou" (which I am far from) and "staying out of trouble." Many people come here looking for help/advice and if someone tells them that it is OK, they could get in trouble if they are looking to hide something from the Trustee. Now, the OP wanted to know if his PayPal account could be an issue with the Trustee (review original posting). Yes it can be an issue. Does stating that make me "holier than thou?" I don't think so.

Let me give you a situation as to being cautious as to advice on a BK forum...prior to our filing in 2002, we were advised by people in another forum to try not to file and to use all our savings because filing was a bad thing. We used my husband's 401(k) when we should have been more cautious and got better advice. We found out after the fact and way too late that we could have saved those funds. There are many of us on this forum that will state it is good to be cautious and avoid risk. Why? Cause we have been there.

I work in the legal system though I am not a lawyer and never contended to be one so I do know how the system works but an asset is an asset and it would take quite a bit of legal wrangling to have a trustee determine otherwise. I am done with this. I am glad you have your PayPal account (I have one also as do lots of folks during BK) but the window I was focusing on with this thread was the time before filing where the transactions to/from the account could be caught by a Trustee. As I state above, an asset is an asset.

See there you go again. Telling the absolute 100% truth as you know it. It is one thing to state your opinion. It is another to shove it down people's throats becuase you beleive that you are 100% right.

A paypal account in and of itself is NOT an asset. PERIOD. I have the legal/financial experience to be able to state that. In your own words, you do not! The funds a party might have sitting in a paypal account may or may not be an asset. Until you can provide some case law that has been generated by the bankruptcy courts defining a paypal account as an asset, it would be wise not to definitively state what the legal classification of things are.

Yes, it is better to be safe than sorry and err on the side of caution. Common sense would tell you that. Just like common sense would tell me not to empty my 401K based on something I read on a message board!

[Flamingo]

See there you go again. Telling the absolute 100% truth as you know it. It is one thing to state your opinion. It is another to shove it down people's throats becuase you beleive that you are 100% right.

A paypal account in and of itself is NOT an asset. PERIOD. I have the legal/financial experience to be able to state that. In your own words, you do not! The funds a party might have sitting in a paypal account may or may not be an asset. Until you can provide some case law that has been generated by the bankruptcy courts defining a paypal account as an asset, it would be wise not to definitively state what the legal classification of things are.

Yes, it is better to be safe than sorry and err on the side of caution. Common sense would tell you that. Just like common sense would tell me not to empty my 401K based on something I read on a message board!

You are doing the same in this posting as you state I do in mine.

I and others would consider them an asset since it is cash in a account. You and others may not. Does it pay to ask your attorney? Of course it does. Does it matter whether or not it's a bank account? What about funds that are held in a trust that are considered an asset that may be distributable during a 13...a trust is not a bank account. Maybe someone on here who has a pal in a law firm that handles BK can find out whether or not a PayPal account is an "asset." That way those considering Chapter 13 can find out for sure and not just guess. Have a good day and thank you for the comment on the 401(k). When you never have filed BK before, you tend to take the wrong advice prior to consulting an attorney; part of the reason I state what I do on here as to being "cautious."

[NewHope]

In our 13 we told attny, he never asked as well as trustee for either Paypal records or bank statements...Paypal is sort of like a snap shot......most transactions are small, yes if you sell a million dollar Monet then yes be worried....blow off the rest

[epiphany]

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.

Great Points Catia....I hadn't thought about the paper trail listed as PAYPAL on every transaction made. I have those all over the place! And like you, I am going to disclose it....I was anyways as there is never anything in there for very long anyway.

EP

[epiphany]

Acutally not. What I am saying is the practical reality--not some pipe dream I made up to comfort myself. What YOU are saying is the extreme situation. You seem to be of the opinion that if you earn $20 one day babysitting your neighbor's kid, you better run and get a W-2 and send a certified letter to your Trustee alerting him as to your new found income. I am saying that the trustee really doesn't care about miniscule transactions.

Well this is an entertaining thread.

However much I am enjoying this, southerncomfort, I must tell you that your advice is reckless and could be damaging to people who come here and read your speak as gospel. It's one thing to have an opinion and state it as such, it's quite another to publish incorrect and harmful information as fact to an audience who may be ignorant (through no fault of their own) and initially believe everything that they read in this forum. PayPal accounts will probably not be an issue for many , but I don't believe any of us can speak for what all trustees will or will not care about.

EP

[Bandit]

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

There are three different ways.
1)use a charge card
2)use your bank account
3)use paypal buyer credit (paypals credit card)

[Bandit]

In our 13 we told attny, he never asked as well as trustee for either Paypal records or bank statements...Paypal is sort of like a snap shot......most transactions are small, yes if you sell a million dollar Monet then yes be worried....blow off the rest

how can they not ask for bank statements?
I mean, how do they go about determining bills/anything without that?

Do you just give paystubs? or just write down whatever on the forms? or what?

[MOMof3]

We did not include our Paypal account with our filings, but we also don't keep a balance there. If you have a balance in your account I would just transfer it to your regular bank account that is linked to it and spend it on necessities & list your paypal balance as zero. If you keep it in there, you might be at risk because Paypal actually will pay you interest on money kept in their account. I know this because my father in law had a paypal/ebay business for awhile & he kept his money in paypal because they automatically put it in a money market account for him & paid him interest monthly. At that point, I don't think it's any different from a "Bank" savings account & it should be listed.