Confused about Cash...

[NoTomatoCan]

Ok, so I have read a bunch of threads discussing how to get rid of excess cash prior to a BK as well as when to file (pre or post paycheck) to ensure minimal cash in the bank.

If I have more than the allowed exemption does the trustee take those funds or is that just an additional amount that is added to the CH7 liquidation test?

Sorry if this is a basic question. I have looked and can not find a clear answer.

[momofthree]

I'm wondering the same thing, and I think it also varies based on your state. I'm in CA.

[lrprn]

If I have more than the allowed exemption, does the trustee take those funds...

If you have more cash on hand than the allowed exemption for your state, then how interested your trustee is going to be depends on the amount over you have. $10 over is one thing, $1000 over is another. How much cash are we talking about here?

...or is that just an additional amount that is added to the CH7 liquidation test?

Sorry but I'm a little confused by your question.

If your trustee takes cash that you can't protect with exemptions, then you become an asset Ch 7. After the trustee takes his/her portion of the cash off the top, the remainder of the cash is disbursed to your creditors in equal portions.

When you say "Ch 7 liquidation test", do you mean figuring out if your Ch 13 creditors will get the same amount they would get if you filed Ch 7?

[NoTomatoCan]

lrprn - Sorry for the confusion.

The question is whether the trustee WILL take any cash we have on hand over the exemption amount.

[lrprn]

The question is whether the trustee WILL take any cash we have on hand over the exemption amount.

It really does depend on how much cash over what's allowed by your exemptions is involved. No one here has a crystal ball to know what your trustee will do with your unprotected cash.

Your lawyer is familiar with your trustee's practices with other filers in this situation. Have you asked him/her about what you should expect to happen yet?

[NoTomatoCan]

Ok, so spoke with my attorney and his answer was essentially so long as the amount is not excessive, then it doesn't matter. He stated that whatever we have in our accounts that can not be protected will just be added to the liquidation test amount.

Since we don't have much from a liquidation standpoint that isn't covered by an exemption, AND we are going to be paying around $800-$1,200 per month, then a few thousand in our checking accounts was no big deal.

When I pressed about what is "excessive" he said to just "keep it under $4k".

Not a perfect answer, but it works for me. That just means that we can't file on payday, but otherwise don't have to be overly cautious about what particular day we file.

[StartingOver08]

NTC, I have to emphasize to the others reading this thread that if you have excess funds of "under $4k" in some districts, like ours in Fl, the Trustee will come in and take those funds. As lrpn stated it really is state specific so check your states exemptions carefully.. CA has very generous exemptions. Ours are $1000 for auto and $1000 for personal plus the homestead exemption. You can see where an additional $4k in Fl would make the Trustee happy. It makes the case an asset case and the funds are liquid and easy for the Trustee to take.

[NoTomatoCan]

StartingOvar - I agree. That is where my confusion began.


In my original atty consultation he said not to worry about it, but I didn't press for details. Then I saw a lot of post on here that indicated for most that it very much did matter. Follow up with attorney clarified it for me, but it does not seem consistent with what others have experienced.

[Flamingo]

StartingOvar - I agree. That is where my confusion began.


In my original atty consultation he said not to worry about it, but I didn't press for details. Then I saw a lot of post on here that indicated for most that it very much did matter. Follow up with attorney clarified it for me, but it does not seem consistent with what others have experienced.

We are not attorney's on here and can't give you answers you may want to hear that overturn what your attorney advised you as to your specific situation and what is required by the Trustee in the state in which you reside. When in doubt as to a financial issues such as this and your attorney confuses you, press the matter and ask for further details/information. If your attorney is good, you will get good advice for your particular situation and state. No BK filing is cookie cutter - they are al different and different experiences so confusion can easily result.

[NoTomatoCan]

Understood. Was simply reporting back what I was told for my specific situation.

[frogger]

I wouldn't go into a 7 with an extra 4k in my bank account that I couldn't exempt. I'd have an extra 4K worth of toilet paper, food, clothing, and things necessary to my future life. Of course, that's just me.......

[NoTomatoCan]

Nor would I. Very positive this would not apply to a CH7.

I am doing a CH13.

My original question was (in a CH13) whether the trustee would take any extra cash over a certain limit OR would I get to keep the cash and it just increases what I would have to put in the plan based on the CH7 liquidation test.

Probably did a poor job of asking the question originally. (Not even sure if my attempts to rephrase it are any better).

Based on feedback, sort of wish I never posted...

[ABC]

If I had $ 6,000 in the bank but knew the 1st was coming and had $ 6,500 in bills I would consider that ZERO in the bank.
If I had any disposable cash, I would not be filing.

[LadyInTheRed]

If I had $ 6,000 in the bank but knew the 1st was coming and had $ 6,500 in bills I would consider that ZERO in the bank.
If I had any disposable cash, I would not be filing.

I'm sure everyone here in or contemplating Chap 13 wish the cash they had available could solve their financial problems and keep them out of spending 5 years in a Chap. 13 plan!

In another thread, the OP said that the $25k owed to BoA is a drop in the bucket. If $6,000 cannot solve the entire problem and permanently avoid the need for bankruptcy, using it to pay creditors would be throwing away money. If the existence of cash causes no problem in confirming the Chap. 13 plan, it would be a good safety net to help insure the OP completes the Chap 13 plan. That's probably why you are allowed to keep assets in a 13 as long as, during the life of the plan, the creditors get paid at least what they'd get in a Chap 7. Debtors forced to start out with $0, have an especially hard time at first, especially if a periodic expense that's factored into their budget (or an unexpected expens that is not) comes up too soon to accumulate the funds to cover it.

[ABC]

Well , I have a job change coming to , and it's really out of my control. I don't really like the 13 , just don't qualify for a 7 (yet...)