Bonus check two weeks after filing?

[olysan]

I recieved a bonus from work today, approximately 2 weeks after filing Chapter 7. It is substansial and would certainly put me over the cash exemption. I have planned for most of it to go towards some necessary expenses like real estate taxes etc. If I deposit it in my bank, is it possible for the trustee to freeze that account and take it?

[keepinitreal]

The cash exemption is only for the day you filed. The pay you earn after filing day is separate from that.

[olysan]

The cash exemption is only for the day you filed. The pay you earn after filing day is separate from that.

Does that mean that they can not come after my bonus?

[BKlooker]

Hi olysan,

I am not a lawyer, but in general, as can be confirmed by the lawyers on here, anything you make after filing is indeed yours. BK = snapshot in time, as it relates to exemptions, cash on hand, etc. Some of your schedules, etc. are forward looking, but in the more generic sense. Your bonus is yours....no trustee can take from what you make after filing, with the exception of tax refunds sometimes.

[debee]

When did you earn the bonus? Is it based on the entire year's work? the last quarter? Some trustees ask about year end bonuses, especially if your previous year's tax returns indicate you receive them as part of your compensation.

If it's based only the work you did since filing, it's all yours. But if it's based on work you performed prior to filing it would be (in part or whole) "earned but unpaid" income as of the time of filing, which makes it part of the bankruptcy estate.

[BKlooker]

Do you have a lawyer, olysan? I would double check with him/her to see if you can amend and exempt it (or the lawyer may just tell you not to worry about it unless they ask for it, depending on just how big it is).

[btbeme]

debee has a very valid point. Be ready and able to answer truthfully should the matter be raised in the 341 meeting. The Trustee has every right to ask if your financial picture has changed since filing as well as ask for documentation. I can guarantee that if you are honest (and prepared) if/when asked, you stand a much better chance of staying in the Trustee's good graces. Receiving an unexpected bonus is a lot different that knowing your regular, expected quarterly or annual bonus was coming due a week after filing and "forgetting" to enter that as income earned but not yet received. BKlooker has good advice - ask your attorney if it will make a difference.

[ValleYum]

I would mention the bonus but preface my disclosure with something along the lines of: "In these uncertain economic times, I was not aware that bonuses were even being considered by my employer this year...." blah blah.

[helpmeout]

I received a decent bonus the day after I filed (I knew I was getting it so my attorney filed the day before). I didn't have to list it on my forms at all since it wasn't part of the bankruptcy estate.

[helpmeout]

When did you earn the bonus? Is it based on the entire year's work? the last quarter? Some trustees ask about year end bonuses, especially if your previous year's tax returns indicate you receive them as part of your compensation.

If it's based only the work you did since filing, it's all yours. But if it's based on work you performed prior to filing it would be (in part or whole) "earned but unpaid" income as of the time of filing, which makes it part of the bankruptcy estate.

My bonus is based on how well the company did the prior year. My BK attorney told me it wasn't an issue. It didn't matter that it was based on the company's performance for 2009. What mattered is when it was paid out. Which was the day after I filed. It wasn't mentioned to the Trustee, just the change in my tax refund nor did the Trustee ask about any bonus'.

[bk2009]

Can you use some or all of it up in expenses - things that perhaps you've put off for too long? New tires? Oil changes for the car(s)? Dental checkups? new eyeglasses? Etc, etc?

[lunatango]

I also filed a chapter 7 and 3 weeks later my wife received a substantial bonus. She was allowed to keep the money because it was to the day of filing. At the 341 hearing, the trustee will ask you if you have any expected proceeds from lawsuits, tax returns but never asks about payroll bonuses. Also, your pay stubs are only up to the day of filing so there should be no record of future earnings.

Our bk was discharged and because we were timely (prior to the bonus, not after) we kept the much needed bonus.

Good Luck.

[debee]

There are people on this forum who didn't have to give up any part of their tax refund, but that doesn't mean the trustee was not entitled to it.

A tax refund is property you are entitled to receive but do not yet possess at the time of filing. It is part of the "bankruptcy estate" when you file even though you might not have it listed anywhere in your schedules. The same applies to "earned but unpaid" income. 11 USC 541 defines property of the estate and you can read it here: http://www.law.cornell.edu/uscode/us...1----000-.html

In Missouri, you are generally able to exempt 75% of your "earned but unpaid" wages up to the date of filing. So the trustee is entitled to the other 25%. What you earn after you file is explicitly excluded from the bankruptcy estate. The key thing is when the income was "earned".

There isn't a one-size fits all set of questions/documents that the trustees use. Even within the same district, trustees' requirements are diverse. Variation in Sacramento: http://www.sacbankruptcytrustees.com/ Further variation exists on a case-by-case basis.

There are trustees who will want to see your most recent pay stub at the 341. Not the stub that includes the filing date, but the most recent one just prior to the 341. You can read about that in the 341 section of this forum, or in the Federal Rules of Bankruptcy Procedure 4002(b)(2). (http://www.law.cornell.edu/rules/frbp/rules.htm)

edit: I don't know how much, if any, of the bonus you would be able to exempt (presuming the trustee finds out about it).

[discombob1]

I listed an annual bonus in my schedules. We get it in December and I listed what it was last year since the amount changes based on company pofits each year. Last year it was roughly a months salary before taxes. The trustee never mentioned it or asked me a single thing about it. Granted I'm not in a super high tax bracket, but I think it would have put me over the cash exemption. just. My experience but hope it helps! I also have no way of knowing if or how much my bonus would be until last minute, and that may be the same for you and may satisfy the trustee.