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Will Filing PROMPT Creditors to Levy Bank Accounts?

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    #1

    Will Filing PROMPT Creditors to Levy Bank Accounts?

    Two questions:

    #1 - I was looking at another forum where someone mentioned this is a possibility, that a BK filing can cause a creditor to move fast to seize your bank account. Perhaps I misunderstood their post. Can someone clarify? I thought a filing would PREVENT a creditor from levying or invalidate a levy in process (barring any exclusions, such as for purposes of child support, alimony, etc.).

    #2 - In the sample Schedule B in the Nolo book, they show COH and a checking balance as very minimal -- $100 in each or thereabouts. And I have read over and over again not to have much COH at time of filing. If that's all the cash one has or should have at time of filing, how is one supposed to survive (pay rent, utilities, etc??).

    Unless I spend what cash I have on hand (easy to do, I might add, as my car is in need of repair), I could easily have several thousand in cash at time of filing. This is cash from unemployment checks, so it it my understanding that ALL those funds are exempt. Under what circumstances, if any, could a trustee take it? I thought I would not even have to use the Wildcard exemption to exempt this cash, as it is exempt under a different civil code (public benefits), correct?

    I am VERY uncomfortable taking my cash down to only $100 before filing. I won't know how to survive if I do that.

    Not trying to do anything illegal or hide COH assets, just trying to understand the law.

    Thank you.
    Tags: None
    #2
    #1 - Filing stops the collection actions.
    #2 - No comment.
    All information contained in this post is for informational and amusement purposes only.
    Bankruptcy is a process, not an event.......

    Comment

      #3
      Don't file until you have a job and your finances are stable.
      At some point, you'll eventually spend all of your money regardless if you file bk or not. Then, how will your survive?

      Comment

        #4
        No, once you've filed the stay is in effect and the can't levy your account. Now, suggesting that you are about to file may prompt a levy, but even then, if the amount of money snagged is significant, the trustee is going to pull it back into the estate.
        Pay no attention to anything I post. I graduated last in my class from a fly-by-night law school that no longer exists; I never studied or went to class; and I only post on internet forums when I'm too drunk to crawl away from the computer.

        Comment

          #5
          Originally posted by MSbklawyer View Post
          No, once you've filed the stay is in effect and the can't levy your account. Now, suggesting that you are about to file may prompt a levy, but even then, if the amount of money snagged is significant, the trustee is going to pull it back into the estate.
          Ok, thanks. Maybe the post said if you suggest you might file, that could prompt levy on an account.

          Comment

            #6
            Once you file, you are safe. That is why you NEVER warn your creditors that you may or will file in a few weeks/months. It gives them time to file actions against you.

            Just before you file pay your utility bills, mortgage or rent, vehicle payments (if you are keeping them), etc. That will deplete your cash.

            Comment

              #7
              Originally posted by Bell30656 View Post
              Once you file, you are safe. That is why you NEVER warn your creditors that you may or will file in a few weeks/months. It gives them time to file actions against you.

              Just before you file pay your utility bills, mortgage or rent, vehicle payments (if you are keeping them), etc. That will deplete your cash.
              Thanks. I have seen quite a few posts (not necessarily in this forum) where people have said telling creditors they are planning on filing might make them back off. But what you say makes sense.

              As to the COH, I would have no problem spending it on legitimate needs, but I thought I did not have to, as unemployment funds are exempt under CA law.

              I'm still not clear whether having a few thousand in cash strictly from unemployment benefits at time of filing could be taken by a trustee. There's probably an answer in the Nolo book and I just haven't gotten to it yet.

              Comment

                #8
                Having a few thousand in cash on filing day is not a good idea. My lawyers advice was to only have two digits in my bank accounts and less than that in my pocket. Of course, after paying his fee that was easily done. Actually he wasn't as bad as some I've heard of.

                Yes, telling a debt collector particularly a JDB or a local OC that you are planning to file in the future could result in them immediately filing a civil suit against you (especially small claims) where they hope to get a judgment and garnishment or seizure before you can get the funds built up to file bankruptcy. They figure any money is better than getting it all dismissed in CH7

                Comment

                  #9
                  Got it. Not sure I could postpone the car repair much longer anyway. Besides the fact that you have to come up with cash for a BK, the creditors also know that a lot of people would have difficulty getting all the needed documentation ready in a hurry.

                  Comment

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