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[Single Filers] How is it that you can exempt ~$12k cash in the bank but still declare bankruptcy?

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    [Single Filers] How is it that you can exempt ~$12k cash in the bank but still declare bankruptcy?

    Hey BK Forum,

    I've been reading up on the federal wildcard exemption that is available in my state. It seems, based from what I've read, a single filer can exempt up to ~$12k in cash. How is it allowed for people to save up $12k cash, exempt all of it using the wildcard, and then declare bankruptcy? Wouldn't your creditors want a piece of that pie instead of a person saving it all up?

    Thank you.

    #2
    Sure, the creditor's would like that money. But, the law states that every debtor has a right to exempt certain assets from collection by creditors. In BK, the creditors are no longer the ones in control and don't get everything they want. You aren't expected to become destitute to file BK.
    LadyInTheRed is in the black!
    Filed Chap 13 April 2010. Discharged May 2015.
    $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

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      #3
      In the state of Indiana, for the two of us filing jointly, we are allowed a total of $800 in all accounts, anywhere. That feels pretty darn destitute for a family of five.

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        #4
        Keep in mind this is the unused portion of the homestead exemption. I guess it's possible someone would have $12k in cash laying around, and able to exempt it. It's also possible that someone with $12k in the bank is also a homeowner, and as such may be concerned about their homestead exemption. If they have enough equity, there may not be any unused exemption available.

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          #5
          When I filed in Arizona, the exemptions at the time allowed only a paltry $300 in cash or cash equivalent for a single person, or $600 for a married couple. This was in 2013, although the exemptions have now increased somewhat. I believe I had about $800 to $1000, but fortunately, the trustee did not bother going after the additional money.

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            #6
            I don't think many states have an exemption for that much cash. People protecting that much cash are likely renters who don't own a home, and can thus use their homestead exemption (up to a certain amount) to protect other assets.
            This post does not constitute legal advice. If you use my advice in place of a lawyer, God help you.

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              #7
              Originally posted by LadyInTheRed View Post
              You aren't expected to become destitute to file BK.
              It sure feels like it! I'm in a chapter 13 with no savings, and we pay out ALL our disposable income. I have no idea how we will pay for our car tags next month. And it's not like over the next 5 years that we won't have extra expenses, at my last oil change I was told I need two more tires - well, I can't! We are a month behind on electric and internet (needed for my job).

              I feel like C13 was designed for people to fail, I just don't see how we will be able to do it when we have no room for emergencies. And I just love (sarcasm) how the plan doesn't allow us to help with college expenses for our 17 year old daughter, yet the FAFSA figures that we can pay a ton of money.

              Sorry to vent, but we are only a couple months in and feeling like we'll never make it

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