How is money in bank account handled?

[jonance]

So when i file lets say i have $700 in my bank account. When would i be expected to pay $700 to the trustee? Would my account be frozen or can i continue to use it as necessary?

[mtbc]

Will you be exempting it somehow?

It may get frozen -- Wells Fargo seem to be known for that -- but probably not. Perhaps it can be used by the bank to balance out anything you otherwise owe them. If you can exempt it, I've the impression you can use it for day-to-day necessities, but it is the bankruptcy estate's, not yours, until the trustee has abandoned it to you after the 341. Sometimes at the 341 trustees ask how much is now in the accounts.

[jonance]

No i won't be able to exempt but $1000. So actually i think i'll have about $2000, $1000 of which will be non-exempt. Would i bring a check to the 341? Wait until after?

[lrprn]

So when i file lets say i have $700 in my bank account. When would i be expected to pay $700 to the trustee?

You will not have to pay the $700 to the trustee unless you can't protect at least $500 of it with your state bk exemptions. Can you protect part or all of the $700 when you file?

Would my account be frozen or can i continue to use it as necessary?

The answer depends on if you have included creditors in your bankruptcy that have cross-collateralization clauses in their agreements you signed. For example, your bank account is at a bank or credit union that also issued you a credit card or loan. If there's a cross-collateralization clause that allows the bank/CU to take money from your account to pay missing cc or loan payments, then it's possible the bank/CU could take the $700 to pay your deliquent payments. The good news is that this is preventable just by opening a new bank account at a different bank before filing.

However, if you don't have this situation and your accounts and credit cards/loans aren't at the same financial institution, then it's nearly impossible for any creditor to get to your $700 before you file. If your state's bk exemptions can protect all the cash in your accounts, then you're fine. If your state's exemptions can't protect the whole $700, then most bk lawyers will recommend having as little as possible in your accounts - $250 or less on filing day if you can manage it.

To be completely safe, it's best to ensure that any big checks written on your account (like rent or a house or car payment) clear before you file just in case, but you can go ahead and use the account as you usually do.

[OHBOY]

Do you need any groceries, toiletpaper, toothpaste, asperin, printer ink/printer paper, shoes, ect.?..............

[pa308]

Do you need any groceries, toiletpaper, toothpaste, asperin, printer ink/printer paper, shoes, ect.?..............

dental work, eye glasses.....

[Dannmcg357]

Why not just withdraw the money in $300 increments before you file. Most places still accept cash ;)

[DeadManCrawling]

Many people do as all of the above posts suggest. There is nothing wrong with taking the money out in cash and using it to pay normal expenses, like rent, mortgage, car payments, insurance, food, dental, etc.

If you have a few hundred in cash when you file, it won't be a big deal.

You should also, if possible, time your filing so that there is as little money as possible in all accounts. So, prior to payday but after bills are paid is a good choice.

At our 341, the trustee was not interested in a few hundred bucks. Unless the debtor was hiding things in other areas. We did see one case where the trustee ordered a woman to write a check for ALL of the balance in her business account. About $500. However the woman had also "lost" or "misplaced" 80 THOUSAND dollars. So, she should have expected trouble. We were over the exemption for cash, by probably 1100. We were not asked about it.

State exemptions vary, and might be greater than you suspect. In FL, we have a little-known exemption for 6 months of wages, paid or unpaid, in bank or in cash, in any form, for the head of the household. There is a limit of 3 or 5k, I think, but not many people know about this exemption. So it is a good idea to make sure you DO know all of your possible exemptions as well.

Good luck,

-dmc

[pa308]

You should also, if possible, time your filing so that there is as little money as possible in all accounts. So, prior to payday but after bills are paid is a good choice.

-dmc

Excellent advice DeadMan, I had forgotten that point. Make sure this is communicated with the attorney so they exactly when to file the papers. I had let my attorney know to have it all ready and then advised him the date to file.

[jonance]

Thanks guys for the advice, it appears thats what my atty wants to do. I am going in for paperwork on the 12th but he'll wait to file to time with paycheck and allow me to pay mortgage, car payment etc

[helpmeout]

Pay bills before you file and you want to give the checks enough time to clear. I plan on getting money orders and sending it to the daycare (who are famous for taking a couple of weeks to cash a check) and my car payment in the month that I file. I also plan on going grocery shopping the day before I file. My account will probably be close to 0 after all of this.

[BrokenBrklyn]

It depends on what the exemptions are in your state too and what you're exempting. On the bankruptcy schedule when your lawyer draws it up, it should say what was in your bank account at the time.