Pre-BK: Cash from Retirement Contributions

[marcylb1]

I recently quit teaching and requested that my retirement contributions be sent to me in a check (I'm guessing around $15,000). That check is due to arrive within 30 days.

I'm planning to file a DIY Chapter 7 BK before it arrives but don't know the laws about "cash on hand" and money that comes in after filing. If I receive this check after the file date, am I in the clear? How long until it's ok to receive cash like this?

If the money will be taken from me anyway, I'd like to use it to buy something "exempt" and file BK after it arrives and I've spent it. Is that ok or will my purchase be suspect?

Thanks, I'm new and I need all the help I can get.

[free2breathe]

That sort of purchase would certainly be suspect. Can you roll your retirement into another account? This would be the best thing to do, as retirement funds are exempt and this is the safest thing you can do with that money. If you choose not to do that, the $15,000 is going to be considered cash on hand or in a bank account, and it will be property of the bankruptcy estate.

Though you are going to file pro se, it would be a good idea to take advantage of attorneys' free consultations. During a consultation you could pose this question and see what a couple of attorneys have to say about it.

[debee]

Also, CA has two sets of exemptions. You can use system 2 to exempt the cash if you don't need the exemption for something else. See LadyInTheRed's blog for the most updated version of the CA exemptions. http://www.bkforum.com/entry.php?336...tcy-Exemptions

[tcreegan]

Hi Marcy,

I heard ....$15,000 check....DIY bankruptcy....what can I do with the money....

I thought....wow, this could easily be a $15,000 mistake...

debee gave you the link to CA exemptions, critical information. Getting a 15K check right before a BK is like setting fresh meat for the wolves. To keep this from being a donation to your creditors, it needs ironclad protection. free2breathe mentioned BK attorney consultations, not a bad idea.

Here are some more resources for a pro-se filer:

NOLO book. Highly recommended step-by-step guide, see www.nolo.com
The actual US Code that covers BK can be found at http://www.law.cornell.edu/uscode/usc_sup_01_11.html
The federal rules for bankruptcy can be found here: http://www.law.cornell.edu/rules/frbp/
Depending on where you are in CA, the BK court for your area will have the "local BK rules" for that court.
There is a separate pro-se forum on this website.

And, of course, lots of good people to help out around here, keep posting!

Tom in Colo

[HHM]

Take $2K of that and hire an attorney to help you navigate the WIDE GREY area that is BK planning. As others have stated, if you do this wrong, you might as well just burn the money.

[NeedOptions]

Can't you leave the money in STRS (I'm a teacher in CA btw) and take it out after you file for Ch. 7 and receive the discharge? That way the money would be exempt as it is still in the retirement system. I really don't know if this is allowable but I don't see why it wouldn't be.