Cash in checking account

[ocean_water]

Hi everyone,

I am new to this site, found it today.

In reading past posts, I have read on a few occasions that it is problematic to have excess money in your checking account when you file for chapter 7.

Why would that be a problem?


Thank You.

[LinSC]

Depending on your State's exemptions, you are only allowed to have "X" amount of cash on hand as of the date of filing Chapter 7. Any excess would have to be turned over to the Trustee to help pay your creditors.

[HHM]

Cash is an asset and as LinSC says, if there is no way to exempt it, then it become subject to seizure by the trustee.

The exemptions vary from state to state and depend on the source of the cash. i.e. if you have $1000 in your checking account, but all that money was from social security benefits, then it will be probably be exempt.

However, you can't just pull money out of your bank accounts right before filing BK either to protect it. You need to be able to justify any use of money within 60 days of filing BK as a necessary expense.

[Whittio]

I used the $1000 wild card on my mom's cash on hand. Although she only had $300 in the savings and usually only $75-$200 in the checking. I was worried that while saving to pay rent/bills would be a problem. Like right now, she has almost $400 in her checking, but she only gets one more pay check before her rent/electricity/phone are all due! So I think they understand a certain amount, but you wouldn't want $3000 sitting in there, they would want you to send that to your creditors. (understandably so too!)