Close Bank Accounts BEFORE FILING CH7?

[technoreid1]

Should we Close Bank Accounts BEFORE FILING CH7?

Is there any benefit to close out our bank accounts before filing and do everything with cash/money orders/cashiers checks?

thanks, techno

[jp2861]

I closed two checking accounts. Just make sure you keep copies of the bank statements in case they ask.

I don't see any benefit to closing the accounts though. If you're not worrying about a collector getting into your account it's probably easier to keep them open. If you can, pay all of your bills with your debit card and the bank statement will be your receipts.

I closed mine because I wanted to clean things up. They were empty for a year or so, I just never paid attention to them.

[CATCHMEIFYOUCAN]

You might have trouble getting a new account open at another bank, some creditors (like credit unions) have what they call "cross collateral" they can automatically dip into your accounts to a pay off some credit cards you might owe them if you have credit cards w/the same bank. I withdrew as much as I could from those accounts and left the minimum, as they would not let me close them out. Sure enough there was this one account I left $10 in, the fuggers took $5!

catchmeifyoucan

[freshstart06]

I don't think you should close your bank account before filing, I read something about that but I can't remember. Just leave it open unit after you file. If you have pending transactions cancel them.

[SinkingFast]

Any bank accts you close within 2 years prior to filing BK must be disclosed.

As JP said,............ You'd wanna keep statements from any accts closed prior to filing.

We moved and our attny asked for our last 3 statements on the acct we closed out of State.

Unless you move or shut down a business where closing an acct would be normal "course of business", it could raise a red flag with the Trustee by closing bank accts.

Closing bank accts was/is a common way to hide assets. If you want the Trustee digging further into your financial affairs, put closing bank accts on your "To Do" list.

[technoreid1]

I guess I was under the assumption that we are not to use
banking institutions during the BK?

My attorney said to make sure you dont have much money in your bank at file time??

thanks, techno

Any bank accts you close within 2 years prior to filing BK must be disclosed.

As JP said,............ You'd wanna keep statements from any accts closed prior to filing.

We moved and our attny asked for our last 3 statements on the acct we closed out of State.

Unless you move or shut down a business where closing an acct would be normal "course of business", it could raise a red flag with the Trustee by closing bank accts.

Closing bank accts was/is a common way to hide assets. If you want the Trustee digging further into your financial affairs, put closing bank accts on your "To Do" list.

[SinkingFast]

How much money you can have "on hand" really depends on your State's Exemptions. That's cash you physically have in your pocket plus your bank accts. What your attny can cover and you not have to worry about the Trustee taking it.

Every State and the Federal Gov't have Exemptions. That's property, cash, assets you can keep to begin your financial fresh start. Some States allow you to choose between State and Federal Exemptions. Which ever one will offer the best protection for your particular situation.

Maybe your State doesn't allow for much cash on hand.

What State do you live in Techno??

[technoreid1]

I am in California.....

I guess another ? I have is WHY should we have barely any money in our checking at the time of filing? So if I have 1k in my bank on Nov 15 and I am going to file on Nov 16th....

I should take about 950 out on the 15th and then put it back into the bak on the 17th (after we file)

Can we put money in the next day and use our accounts as we would normally (i.e., writing checks, using debit card)?

thanks, techno

How much money you can have "on hand" really depends on your State's Exemptions. That's cash you physically have in your pocket plus your bank accts. What your attny can cover and you not have to worry about the Trustee taking it.

Every State and the Federal Gov't have Exemptions. That's property, cash, assets you can keep to begin your financial fresh start. Some States allow you to choose between State and Federal Exemptions. Which ever one will offer the best protection for your particular situation.

Maybe your State doesn't allow for much cash on hand.

What State do you live in Techno??

[ssdsco]

I am in California.....

I guess another ? I have is WHY should we have barely any money in our checking at the time of filing? So if I have 1k in my bank on Nov 15 and I am going to file on Nov 16th....

I should take about 950 out on the 15th and then put it back into the bak on the 17th (after we file)

Can we put money in the next day and use our accounts as we would normally (i.e., writing checks, using debit card)?

thanks, techno

Here’s what my attorney said.

On the day you file you want have no more than what your BK exemptions allow in checking, savings, cash.

In the months leading up to filing analyze your projected cash situation on the day you file. If you’ll be above what’s allowed in your exemptions then look at paying insurance annually instead of monthly, stock up on groceries, fill the gas tank, get dental work done, etc.

Also based on his advice I’ll get my monthly retirement check on the 1st of the month, pay all my bills for that month electronically (or by money order). Un-cleared checks still count as money in your account and part of your bankruptcy estate so you want avoid that. A day later when my checking account and cash is within my allowable exemptions I’ll file.

I continue to use my checking account for basic living expenses as future paychecks come in during the bankruptcy process.

Don’t take any cash out of your account that can’t be documented as basic living expenses or is included in your BK filing or you could get yourself in trouble with the trustee.

That’s my understanding.

[magyar123]

I am in California.....

I guess another ? I have is WHY should we have barely any money in our checking at the time of filing? So if I have 1k in my bank on Nov 15 and I am going to file on Nov 16th....

I should take about 950 out on the 15th and then put it back into the bak on the 17th (after we file)

Can we put money in the next day and use our accounts as we would normally (i.e., writing checks, using debit card)?

thanks, techno

I'm also in CA - but filed in 2004 - old laws, on July 9. My lawyer just advised me to bring the last six full months of bank statements. My bank at the time ran my statements from the 1st of the month through the last business day of the month - which I brought along. Was never asked to produce anything for July 1 through JUly 8. Don't know how picky they get now under the new laws.

[jp2861]

I am in California.....

I guess another ? I have is WHY should we have barely any money in our checking at the time of filing? So if I have 1k in my bank on Nov 15 and I am going to file on Nov 16th....

I should take about 950 out on the 15th and then put it back into the bak on the 17th (after we file)

Can we put money in the next day and use our accounts as we would normally (i.e., writing checks, using debit card)?

thanks, techno

No, if you take it out the day before you'll still have to declare it as cash in hand anyway. If you put any money immediately back into the account and you get audited you're screwed again. If you know the exact date you'll be filing plan 3 or 4 weeks ahead of time to spend that extra cash on things you'll need. The safest way to deal with the money right before you file is to try to make your spending look like the expenses you listed on your Sch J. Like I said before, get the car tuned up, replace the front tires, fill your freezer with meat, get your teeth fixed, etc.

[technoreid1]

What about cash we socked away in a safe before filing?
(trying to save money because we no mortgage or cc payments right now)

thanks, techno

No, if you take it out the day before you'll still have to declare it as cash in hand anyway. If you put any money immediately back into the account and you get audited you're screwed again. If you know the exact date you'll be filing plan 3 or 4 weeks ahead of time to spend that extra cash on things you'll need. The safest way to deal with the money right before you file is to try to make your spending look like the expenses you listed on your Sch J. Like I said before, get the car tuned up, replace the front tires, fill your freezer with meat, get your teeth fixed, etc.

[SinkingFast]

I'm also in CA - but filed in 2004 - old laws, on July 9. My lawyer just advised me to bring the last six full months of bank statements. My bank at the time ran my statements from the 1st of the month through the last business day of the month - which I brought along. Was never asked to produce anything for July 1 through JUly 8. Don't know how picky they get now under the new laws.

Can be very picky now. Depends on the Court you file in.

We had to provide all bank statements up to filing day.

On filing day, we went to On-Line Banking, and printed out a statement of our acct from the date of the last "official" statement up thru filing day.

Then we took a copy of that printout of our bank acct to our 341 and gave it to our attny.

What about cash we socked away in a safe before filing?
(trying to save money because we no mortgage or cc payments right now)

thanks, techno

If you don't declare you have that cash, that would be considered hiding assets.

If you got caught, you'd probably have to cough up the cash to the Trustee.

Your BK case could even be Dismissed with Prejudice. That would mean the debts you filed against could never be Discharged.

Not really worth the risk.

One key to filing is picking your date. Timing filing so you've got bills paid, groceries bought, vehicles filled up, and as little cash as possible in the bank.

Sounds like you're looking at a potential Foreclosure where you're living "rent free" for a bit to save up for Security Deposit and rent.

Personally, I wouldn't be hiding the money as cash at home. Bank Statements are a very good paper trail of where your money comes from and goes to.

So you save up. Pick the place to move to. Pay your Security Deposit and first month's rent with a Cashier's Check. You get a Cashier's Check from your bank. The bank immediately withdraws the funds to back that check from your bank acct. Poof! Money gone.

Any utilities deposits,......... Pay those with a Debit Card or Cash and be sure to get a receipt. Moving costs,...... Like if you have to rent a U-Haul,........... Same thing. Use your Debit Card or pay cash and get a receipt.

Get moved. Then file.

Be sure to go to the BMV/DMV to get a new Driver's License so you have a photo ID with the correct address.

Step back. Take a breathe. And think.

Don't scare yourself into doing something that causes your case to look suspicious to the Trustee. You don't want the Trustee digging any more into your affairs than absolutely necessary.

California has 2 sets of Exemptions. You pick the one that fits your situation the best. You cannot mix and match among the sets of Exemptions.

http://www.bankruptcyinformation.com/CA_exemp.htm

[genseeker]

I filed our BK on a Wed which just happens to be the day for DH direct deposit. What I did was go to the ATM and take out the cash needed to cover the upcoming bills. I then went right to the post office and got money orders for those bills, like power. I made a photo copy of each bill, along with the money order so I could easily show how the cash was spent. The trustee did not ask for copies of statements, although I have them if needed. And I have the copies of the bills and money orders in my folder as well. Usually we used our bank bill pay but it can take up to 2 weeks to show as cleared online, so I made sure the funds were low.

[technoreid1]

The reason we have been saving cash is for a rental home... we are still living in "our" home and they have not yet foreclosed on us....

The reason we take cash out of the bank is because we are getting sued and dont want to face any possible bank levy's - although we have answered the summons.

Our attorney advised us to file before we get our notice of default so that we would have some extra time to move....

We would love to move now but cannot find a place.... it's been hard to find one.

Before we file I have to talk to my attorney about the cash we saved and see what he says.....

Thanks, techno

Can be very picky now. Depends on the Court you file in.

We had to provide all bank statements up to filing day.

On filing day, we went to On-Line Banking, and printed out a statement of our acct from the date of the last "official" statement up thru filing day.

Then we took a copy of that printout of our bank acct to our 341 and gave it to our attny.



If you don't declare you have that cash, that would be considered hiding assets.

If you got caught, you'd probably have to cough up the cash to the Trustee.

Your BK case could even be Dismissed with Prejudice. That would mean the debts you filed against could never be Discharged.

Not really worth the risk.

One key to filing is picking your date. Timing filing so you've got bills paid, groceries bought, vehicles filled up, and as little cash as possible in the bank.

Sounds like you're looking at a potential Foreclosure where you're living "rent free" for a bit to save up for Security Deposit and rent.

Personally, I wouldn't be hiding the money as cash at home. Bank Statements are a very good paper trail of where your money comes from and goes to.

So you save up. Pick the place to move to. Pay your Security Deposit and first month's rent with a Cashier's Check. You get a Cashier's Check from your bank. The bank immediately withdraws the funds to back that check from your bank acct. Poof! Money gone.

Any utilities deposits,......... Pay those with a Debit Card or Cash and be sure to get a receipt. Moving costs,...... Like if you have to rent a U-Haul,........... Same thing. Use your Debit Card or pay cash and get a receipt.

Get moved. Then file.

Be sure to go to the BMV/DMV to get a new Driver's License so you have a photo ID with the correct address.

Step back. Take a breathe. And think.

Don't scare yourself into doing something that causes your case to look suspicious to the Trustee. You don't want the Trustee digging any more into your affairs than absolutely necessary.

California has 2 sets of Exemptions. You pick the one that fits your situation the best. You cannot mix and match among the sets of Exemptions.

http://www.bankruptcyinformation.com/CA_exemp.htm