Allowed to save during a chapter 7?

[drowning123]

New York's exemption is $2,500, but does that matter in a chapter 7? Is one allowed to save as much money as they want during a chapter 7 (before the 341 meeting)? Thanks.

[keptdigging]

Theoretically whatever you receive after the filing date is yours all yours (unless it was already owed to you on the date you filed.) Exemptions apply to assets that were yours on the filing date.

But as with a lot of bk law there are potential issues. If you're able to save a significant amount in just the 45 days between filing and the 341 meeting, it could cause questions to come up such as:

- Was this money you were already owed and belongs in the bk estate?
- Is this evidence of DMI (disposable monthly income) that could be used to fund a Chapter 13?
- Have you received a jump in income, which will cause the TT to ask you to amend your Schedules I & J, which, once again, could cause you to have DMI and be able to fund a Chapter 13?

Now I wouldn't expect a problem if it can be accounted for by a normal variation of cash flow during the month and expenses month to month. Just be ready to explain that it isn't evidence that your filing needs to be changed based on the issues above.

[drowning123]

Thanks, kept, it would all be salary - minus expenses.

[ccsjoe]

drowning, if you are talking of saving a substantial (read Chapter 13) amount post-filing and pre-341 or discharge, then you could be setting yourself up for the trustee to take adverse action against your case, such as conversion to CH13.

[drowning123]

Gotcha, ccsjoe.

[Amanda123]

What if you are saving to pay property taxes coming due in October? I hope to file in afew weeks. We paid the atty. and now are starting almost from scratch with a property tax bill coming due. We expect to have that set aside... is that something to be worried about? I am in NY.

[ccsjoe]

I should not expect it to be a problem since you are listing property taxes on your schedules as expenses, and you can clearly show the money went there.

[momofthree]

What if you are saving to pay property taxes coming due in October? I hope to file in afew weeks. We paid the atty. and now are starting almost from scratch with a property tax bill coming due. We expect to have that set aside... is that something to be worried about? I am in NY.

If you can't exempt the cash on hand, then yes, it's something to be worried about. The trustee isn't going to care if the money is for groceries, your mortgage payment, or your property taxes, if it's in your possession on the day you file and you can't exempt it, he'll want it. I would bet that you could go down to the property tax office and pay it a couple of months early though and they'd gladly take your money.

[ccsjoe]

I misread. I thought money was going to be paid prior to. momofthree is right. See if you can either exempt or pay in advance.

[Amanda123]

Thank you both. We won't have too much saved by the time we file (actually unsure of exactly when that will be). I turned all of the paperwork in today and wrote the atty. their check. I will ask the atty or paralegal about this. Thanks for your replies.

[poormama]

I asked my atty's assistant about that, we are letting the house go and have been trying to save $$ for the security deposit on a rental. She said that the approximately $1500 that we'll have in savings will not be a big deal because it's easy to explain as the deposit for a rental.

[Maine]

Be careful with that, I asked my atty this exact question and he said If I don't have an exemption for it then it is NOT exempt. The trustee does not care if it is for taxes, business travel, rent tomorrow, food or anything else that is necessary...if it's in the bank on file day then it's fair game.