Lawyer says no checking accounts or debit cards

[4ever]

Is this just until after the 341 meeting? I hope it's not for the whole 5 years! He just gave me a list of things today and that was one of them. From what I read on here everyone seems to still have their bank accounts. He said to use money orders or cash and keep the receipts. What do you think about a prepaid money card? I'm going to call tomorrow to find out about that one. That would seem easier then carrying cash around.

[Pandora]

I think I'd find another lawyer....sorry. Having a checking account, writing checks and/or a debit card has nothing to do with your filing bankruptcy or subsequent paying of bills later on.

[4ever]

We already paid him his full amount. When we first talked to him about filing he just said to keep the bank account low, nothing then about not having one at all.

[Pandora]

well I agree with keeping it low - because you will have to claim the amount thats in it and if you cant exempt it...trustee can take it regardless that you have bills to pay. However I do not agree not to have a checking / debit card - I'd ask your lawyer why he/she feels that's necessary. I've never heard of that "requirement". To me, intentionally not having a checking account when you previously had one for the purpose of bankruptcy would draw more attention from the trustee than having one, but thats my opinion.

[4ever]

Just got off the phone with lawyer's secretary and she said not to use the bank account or debit card until after we are in the plan. We can use a prepaid card now though. That makes more sense then not to be able to go the whole 5 years without an account. Thanks for the reply. I posted this last night because I just couldn't wait until this morning to figure out what the heck she was meaning.

[NowImDownInIt]

Neither of those situations really make any sense to me. I have never heard of that stipulation and can't really think of any benefit from it. Your on-hand finances are supposed to be your state of affairs on date of filing, I think, and to not use your debit card from your existing bank account for a month seems like overkill to me. I can understand no new accounts, but how do they expect you to live and what makes a withdrawal to buy a prepaid card different from POS use of your debit card?

[4ever]

I have a prepay card already that I bought after reading up on this forum. I'll have to use money orders for bills that come in the mail and I can use the prepaid card for a couple of bills online that only take credit or debit cards. I guess I'll just be cashing my paychecks (and not depositing) and putting some of the little money I hope to have left over on the prepaid card to use.

[NowImDownInIt]

It just makes no sense to me. I looked further into it and can see no reason why your attorney would ask this of you. There are no rules against use of checking account before, during, or after BK. Just sounds like a lot more work. I would definitely question his reasoning for this.

[jange]

No debit card doesn't make any sense to me either, maybe it is a district specific thing, but still doesn't make any sense. I was told to pay my utilites etc like normal and on time. My bank statement shows what was purchased or who was paid using the debit card, so if you buy a money order and keep the receipt as proof of who you paid, what is the difference? The tt did require us to bring our bank statements that covered the filing period to the 341 meeting. He never questioned any of our expenses paid through the checking account.

confirmed 7 22 10

[Pandora]

The tt did require us to bring our bank statements that covered the filing period to the 341 meeting.

And thats what my concern would be first and foremost. What happens if the Trustee requests bank statements from filing up to 341 - and then even past 341 and you cant provide them? To me, its a red flag when you previously had a checking account, then suddenly dont have one any longer and are paying everything via pre-paid / cash method - then following 341 you suddenly open an account again. Trustee might think you're hiding something.

I dont understand it either - makes no sense at all. All our lawyer said to do was to make sure once we filed that our checking account had all bills cleared so the balance wasnt high - as well as the day of our 341 to ensure it was also an amount we could exempt if necessary and if asked by Trustee.

[lrprn]

The OP, 4ever, lives in Missouri. Missouri has a $400 wild card to cover cash in pocket and in checking and savings accounts or available for use with a debit card - that's not much cash. The lawyer is most likely trying to ensure that 4ever doesn't have more cash on hand than can be protected by the MO state exemptions between filing and the 341. AFter the 341, having more cash on hand, in accounts, and using a debit card are fine.

[4ever]

Thanks lrprn, that made it alot easier to understand.

[cspa522]

The OP, 4ever, lives in Missouri. Missouri has a $400 wild card to cover cash in pocket and in checking and savings accounts or available for use with a debit card - that's not much cash. The lawyer is most likely trying to ensure that 4ever doesn't have more cash on hand than can be protected by the MO state exemptions between filing and the 341. AFter the 341, having more cash on hand, in accounts, and using a debit card are fine.

lrpm -what does this mean? I live in Missouri and we're getting ready to file in November. My lawyer mentioned we should try to keep under $500 in checking and savings, each (so $1000 total), less if we can, but didn't say anything about them taking all of it if we have more than that.

[lrprn]

lrpm -what does this mean? I live in Missouri and we're getting ready to file in November. My lawyer mentioned we should try to keep under $500 in checking and savings, each (so $1000 total), less if we can, but didn't say anything about them taking all of it if we have more than that.

Your lawyer told you to have under $500 in cash (checking and savings) because of the MO wild card exemption - the only exemption in MO that covers cash.

Your lawyer is most familiar with your case, so if you know you are going to have more than $500 in checking + savings on filing day, please ask *before* filing what may happen to the cash in checking and savings that can't be protected by your MO wild card exemption. This can be trustee-dependent - that's why your lawyer who is most familiar with what your trustee normally does in this situation is the best place to get reliable information for good pre-bk planning. Good luck!

[4ever]

Talked to lawyer's office again. They said not to have more then $40 in bank account and still not use a debit card. None of our regular bills ( phone, electric, etc) are under $40 so that makes a debit card useless at this point. It will look strange when the trustee see our past bank statements where 4 paychecks are deposited every month and then the next one only has $40 deposited. Dumb question but we have never used a money order, only checks. Do you get a copy of your money order saying who you are sending it too? I could always copy it on my printer before I mail it off I guess. They said to stop my direct deposit form my job and to use money orders or cash to pay the bills.