Closing out bank accounts

[SweetHoney]

I am in the process of filing Chapter 7 now (already have an attorney, in the process of filing the paperwork). My husband will be filing at some point, probably within 6 months. We had some money in a CD (~$15k) which my husband said we should pull out so they won't be able to take it. I did this last week. In the paperwork, it looks like I need to report any closed accounts. I'm sure they are going to ask what I did with the money and I'm not sure what I should say. Has anyone else done this? How did you handle it?

Thanks!
SH

[TEW]

Nope I sure didn't try anything like that and i would not.
Did you report interest earned on that money on the 2 years income tax returns you are going ot hand over the court when you file. and did you file jointly?

[relief13035]

Yikes - I sure wouldn't have done that

[jribe]

I am in the process of filing Chapter 7 now (already have an attorney, in the process of filing the paperwork). My husband will be filing at some point, probably within 6 months. We had some money in a CD (~$15k) which my husband said we should pull out so they won't be able to take it. I did this last week. In the paperwork, it looks like I need to report any closed accounts. I'm sure they are going to ask what I did with the money and I'm not sure what I should say. Has anyone else done this? How did you handle it?

Thanks!
SH

have you checked your state's exemptions? We have about 10k in savings, but are fine because of the california exemption. I would check that and ask your attorney as well. But honestly- there's not an easy way out of what you did. There's a definite paper trail.

[justbroke]

I'm sure they are going to ask what I did with the money and I'm not sure what I should say. Has anyone else done this? How did you handle it?

Ummm... you need to disclose this money! You can't just start moving money around to hide it from the BK estate. This is exactly what they look for... and especially in a Chapter 7.

Well, what did you do with the money? They will want to know where you spent it. DId you try to convert it into exempt assets (like paying down your mortgage)? Or did you do something else.

Paying down exempt assets isn't necessarily bad, but you need a good lawyer and good pre-bankruptcy planning in order to protect your assets.

I would try to find an exemption to cover the money under (wildcard or unused homestead). You don't want to be accused of BK fraud and never be able to discharge those debts.

[SweetHoney]

I definitely don't want to jeopardize my case. I haven't done anything with the money yet except took it out of the bank. Since we owe taxes, maybe I should just use it towards that now. I live in MD and have been told we're allowed to keep up to $12,000 in assets. My car is worth around $7,500 I believe.

[StartingOver08]

You are allowed to pay the IRS - which would be a good idea in your case. You can also pay your attorney fees. Make sure, as the others have pointed out, that you exempt what you can legally exempt. You will need to show the papertrail so they will not assume fraud. Discuss this openly with your attorney to make sure it is shown in the petition correctly.

The petitions go through tremendous scrutiny during this BK process. If there is something there, the Trustee will find it.

[2Bshinyandnew]

I am in the process of filing Chapter 7 now (already have an attorney, in the process of filing the paperwork). My husband will be filing at some point, probably within 6 months. We had some money in a CD (~$15k) which my husband said we should pull out so they won't be able to take it. I did this last week. In the paperwork, it looks like I need to report any closed accounts. I'm sure they are going to ask what I did with the money and I'm not sure what I should say. Has anyone else done this? How did you handle it?

Thanks!
SH

Was the CD in both your names?

When you closed out the account, did you take cash from the bank, or deposit it in another account?

If the CD was a joint asset and you are filing alone right now, you may be able to exempt all or a portion of it. Ask your attorney.

If you have this cash stashed under your mattress, I would go and open a checking/savings account with it and deposit EXACTLY the amount that was withdrawn from the closed CD. I would use the same bank and title the account the same way the CD was. That way you will be able to clearly show where the money came from and where it went.

I would use the money for bills, attorney fees, mortgage, rent, utilities, taxes, medical expenses, gas, food, dental work, etc, and keep careful records and receipts. I would put the money in an account that utilizes a debit card and paper checks, to show the clearest paper trail.

If the CD was in your name only and you plan on filing soon, you may want to reconsider and wait a few months until the money has been spent on the above, after leaving a clear trail accounting for every penny.

Tell your attorney.

[Logan]

If you have an attorney why not ask him/her?

While this board is great and there is some good advice we are not your attorney.

I had people on this board tell me one thing and my attorney tell me something else. I went with my attorney because he is the expert and I was paying him.

Good luck,

Logan

[hnhlvr]

Pay the IRS, pay up any bills you have, then talk to your lawyer about the rest.

Be sure not to overpay on any bills or rent. Once someone here suggested that, but if you do so, the trustee can take that money!

[okiemom2008]

I am in the process of filing Chapter 7 now (already have an attorney, in the process of filing the paperwork). My husband will be filing at some point, probably within 6 months. We had some money in a CD (~$15k) which my husband said we should pull out so they won't be able to take it. I did this last week. In the paperwork, it looks like I need to report any closed accounts. I'm sure they are going to ask what I did with the money and I'm not sure what I should say. Has anyone else done this? How did you handle it?

Thanks!
SH

Can you put it in an IRA..most states have a IRA exemption..for us it is 5000 each each year..so you have the advantage of both 2008 and year 2009