Asset question

[Blah610]

We have asked our attorney these questions and our waiting on a response.
Forgive me if this a bit all over the place because I'm a bit frustrated at the thought of losing all of our money, even though we were prepared to pay out some. I'm in Texas. We stopped paying all of our credit cards about 2 years ago, right after the start of the pandemic. Never behind on the car or house. Last year we decided to file because we started getting sued over a few of the cards.

In October, we found and paid for one of the few attorneys, within about 20 miles from us, available with my husband's legal plan. We had a video conference with her in November to verify identities and go over our packet we sent in. She said she start working on our chapter 7 case in couple of weeks. In February my husband received an email to activate an account for mycase.com. We did that and uploaded a statement for a loan that changed banks. In March we tried to log into mycase to upload our tax return and the account had been deactivated. Emailed the attorney to question it and she said she closed our case because we didn't respond to an email about our names. This email was never received. She said she need all updated documents to reopen the case, which we provided.

A couple of days ago she emailed and said that she couldn't exempt our home with federal exemptions and state would be best but by using Texas exemptions, we may have to pay out the entirety of our bank accounts. It comes to about $15000. If we would have filed in November/December like I thought we were going to we only had about $3500 in our accounts at that point and our house value was nearly $60000 lower.

Now for the questions. One of our savings accounts (about $1200) is strictly child support direct deposits that my husband receives. Is it correct that child support can't be touched? The majority of the rest of the money is our tax refund. $4800 was the second part of the child tax credit and $5000 earned income credit. Are these protected as well? I've seen some conflicting information on that. If these are protected should I withdraw the funds as cashier's check or something for the attorney to hold on to or does the trustee just ask for the amount in your account minus the protected amounts? I also read that I should have given bank statements for my children's bank accounts. Will their money get taken as well? I am also the payer for my dad's social security, do I need to give his bank statements?

Our car died this week and needs about $3k worth of repairs is this going to cause issues with the trustee when we file? Will we get questioned about paying for a rental car?

Thanks to anyone that took the time to read this novel 😃

[justbroke]

Welcome to BKForum

Now for the questions. One of our savings accounts (about $1200) is strictly child support direct deposits that my husband receives. Is it correct that child support can't be touched? The majority of the rest of the money is our tax refund. $4800 was the second part of the child tax credit and $5000 earned income credit. Are these protected as well?

Let me address a problem I see first, and then answer your question on exempt (protected) money. The problem is the equity in the house. It won't matter if the money in your demand deposit accounts (DDAs such as checking and savings) or in a 401(k). If you need the money to pay the equity to the Trustee, that money must come from somewhere. If you need to come up with $15,000 then you'd have to voluntarily use that money to avoid having the Trustee sell your home to recover something for the bankruptcy estate. (Although it sounds like that's not really a lot of equity and maybe it could be negotiated).

So, to answer your question the difficulty with having child support payments in an account is commingling. Hopefully the account doesn't have any other money so the funds can be traced. I can't speak for Texas as to whether it has an exemption for child support payments, but the issue is whether the funds are commingled.

As for your tax refund, the question is have you received it already? If you already received it, have you spent it on anything? The issue may be whether Texas exemptions, since you're choosing to use the Texas exemptions, cover earned income credit (EIC). I can't speak to the application of Texas exemptions.

I don't know the issue with the local attorney dealing with your case in a prompt manner. I think the attorney probably dropped the ball but I also think that there were long periods of time of communication. I'm not the pushy type but I would have been bothering them two weeks after they said they would get it filed. Not seeing anything until February is a very bad sign that it was forgotten.

I've seen some conflicting information on that. If these are protected should I withdraw the funds as cashier's check or something for the attorney to hold on to or does the trustee just ask for the amount in your account minus the protected amounts?

You should not touch that money. You should not try to move it or otherwise try to prevent the discovery of any money in your accounts. The Trustee will ask for bank statements for at least the 60 days preceding the filing of the case. Some Chapter 7 Trustees even ask for a running total up to the date of the 341 Meeting.

I also read that I should have given bank statements for my children's bank accounts. Will their money get taken as well? I am also the payer for my dad's social security, do I need to give his bank statements?

This is a Trustee specific question, but if you're a custodian then you "hold property for another" (the children's bank account). That would usually be disclosed on the Statement of Financial Affairs (SOFA) when the Chapter 7 is filed. Be sure to ask your attorney about these things. I would think that the questionnaire would ask about these things.

Our car died this week and needs about $3k worth of repairs is this going to cause issues with the trustee when we file? Will we get questioned about paying for a rental car?

I'm sure your attorney will say to get it repaired. You are allowed to spend money on non-luxury items; feed your family, keep a roof over your head, deal with car repair, etc. I can't tell you whether or not to use a credit card to pay for these things. I don't see the Trustee questioning a rental while your car is in the shop. But they may ask... if they see large amounts of money leaving your account right before filing.

Some of these answers depend on when you file. If you're not filing for another few months the responses for some of this could be different.