No such thing as a stupid question(?)

[daylate]

Here's one that is very basic but could refute the long held premise- If you are able to exempt cash-can you spend it during the time your case is open? I've had one attorney say you can (and also take IRA w'd's) but a lot of what I read suggests that not to be the case. From a practical matter since it is exempt it would seem that you could spend it, but from a strict interpretation it doesn't appear you can/should. So lets say you exempt 500 in your checking account- but it slips to 400 for a couple of days to make a payment that is due but then goes back up over the 500-with float it may never actually drop in the bank but it could in your checkbook. Is this another one where it depends on your trustee or pre and post 341? Thoughts/comments?

[justbroke]

On the issue of "float"... the Trustees go by the actual balance (not available balance) based on what the Bank records read, not your checkbook. They don't care that you have a $1,000 check "pending" on the day you filed. Your bankruptcy estate consists of all assets on the day you file (period). Many people get caught with money in the bank, because they expected a check to clear... only to find later that the Trustee wants the money!

As far as spending assets while your case is pending discharge, most Attorneys will instruct you not to convert exempt assets into cash until discharge (in a no asset case). The problem occurs where you are an asset case and things are in flux, or the Trustee is questioning some of your exemptions on assets. I personally would never recommend anyone do anything with assets until at least the 341 Meeting -- in a no-asset case. In an asset case, I would recommend waiting until the earlier of the case closing or the Trustee abandoning the "specific" property.

Now, to a "specific" case, is the IRA. IRAs and other ERISA-qualified plans are 100% exempt from the Trustee. So converting them to cash after filing and before discharge is almost always okay. This is because there is almost zero possibility that the Trustee would question a truly ERISA-qualified plan as "non-exempt". As for other things, like the use of exemptions on a wholly-owned vehicle or other personal property, that is too "iffy" until the Trustee has had a chance to look at the exemption scheme used and whether that item should be exempt.

In any case, my feeling is that... other than paying ongoing bills related to the cost of living, I would not acquire any new property, liquidate an exempt asset, or sell any other property, during the Chapter 7 pendency.

[daylate]

Thanks JB. I understand the actual bank balance thing so I will pay by money order to whittle down balance.

[OhioFiler]

I'm not sure how you see this strategy is helpful. How does paying by money order whittle down your balance anymore than paying by check or debit card?

[daylate]

OhioFiler-I was talking about pre-filing, to eliminate the float issue. I take out the rent in cash(bank balance immediately reduced), buy a money order and mail it to landlord. No funds show up in bank account while money order is floating around in the mail.

[JEM]

Hmmm, again with the tax refund question. We are set to file Friday. (THIS FRIDAY! YAY!) Our attorney said since we were exempting our tax refund, to go ahead and file our taxes when the W-2 came in the mail (any day now), and we could spend it as necessary. No need to wait till we were discharged to spend it--or having to sit on the money till then.

Should I question his advice?

[daylate]

Good related question JEM- the thing about filing BK that is most frustrating to me is the lack of consistent answers (even from attorneys I have consulted with) about how to handle things. Logic would tell me that if something is exempt, then it is exempt and you should be able to do what you want with it. I guess the issue is that upon further review the trustee may determine that my (or your) nickel-ninety eight bank balance is really not exempt although based on math I learned in third grade (maybe 2nd) indicates that if the law says I can exempt a certain amount and I have less, then it most certainly appears to be exempt. Sheesh. Good luck with your refund.

Just want to clarify a comment- When I'm talking about the inconsistency of answers, it is not aimed at the responders here on the board. I have come to realize that there are so many different interpretations due to state differences, trustee differences, and even court rulings etc. that a flat cut and dried answer is almost always impossible to obtain. it is just my number one agita inducing aspect of this whole process. OK-rant over, carry on.

[JEM]

Good related question JEM- the thing about filing BK that is most frustrating to me is the lack of consistent answers (even from attorneys I have consulted with) about how to handle things. Logic would tell me that if something is exempt, then it is exempt and you should be able to do what you want with it. I guess the issue is that upon further review the trustee may determine that my (or your) nickel-ninety eight bank balance is really not exempt although based on math I learned in third grade (maybe 2nd) indicates that if the law says I can exempt a certain amount and I have less, then it most certainly appears to be exempt. Sheesh. Good luck with your refund.

Just want to clarify a comment- When I'm talking about the inconsistency of answers, it is not aimed at the responders here on the board. I have come to realize that there are so many different interpretations due to state differences, trustee differences, and even court rulings etc. that a flat cut and dried answer is almost always impossible to obtain. it is just my number one agita inducing aspect of this whole process. OK-rant over, carry on.

I understand. I have asked my attorney twice on the issue and he has given the same answer. To go ahead and file and spend as needed.

He hasn't given bad advice yet. (That I know of) I guess I just worry because everyone here has different experiences. But depending on the area and the trustee, everyone IS going to have different experiences. LOL

[justbroke]

It really comes down to whether you want to proceed with all due caution, or depend upon believing that your exemptions are un-questionable. Simple as that.

For a person taking money out of an ERISA-qualified account, there's no question that it's exempt. However, exemption on property can be questioned, so it's best just to wait before selling. I think every attorney would tell you that.