TRUSTEE CONTROL of bank accounts

[HKK]

Hi,

From what I know, disposable cash, assets and expenses are considered only up to the point in time when filing for BK7; and after that, any income, assets and expenses is not taken into consideration - correct me if I'm wrong. If this is the case, then what is the reason / purpose for the trustee in taking control of checking and savings accounts until the bankruptcy is finalized?
1. Do they also ask to surrender cash on hand?
2. Can I open another bank account with another bank (and it not be freezed) after filing BK without it affecting the BK process, and using it to deposit checks and pay monthly bills?

Also, what has been your experience with this situation (e.g. was there any restrictions the trustees imposed on you? Were you able to conduct business and personal finances as usual with your bank accounts? Did you need to let them know every penny spent? Did you pay bills via cashiers checks, etc.)?

Your comments and suggestions would be appreciated?

Thank you…….

HKK

[HHM]

Why don't you back-up and explained what happened.

[HKK]

To HHM

I’m from CA and am prepping & planning on filing for BK7 mid January.

[justbroke]

People usually don't worry that much about the Trustee and what control they could exert because most debtors are in serious trouble and need relief. The bankruptcy code clearly states that the Trustee is in control of the Bankruptcy Estate and that Estate is created upon filing. I won't go into much more detail, but you could have an asset that is not only property of hte Estate, but is also non-exempt (meaning that it is not protected by an exemption allowing you to keep the asset). Any appreciation of that asset is still property of the estate.

If you have a business and will continue to operate the business, this is significant. You really need advice of counsel if you're going to continue to operate a business; especially if the business is a sole-proprietorship, a "closely-held" LLC, other alter-ego, or even an S-Corp. While you could continue with your personal finances, payments to certain creditors would stop (unsecured creditors), but you may have non-exempt assets which you may not touch.

I'm not too comfortable going into much more detail. If you're doing bankruptcy pre-planning, and operate any type of business under any organizational scheme, you really need local help. Some of your prior posts lead me to believe that you have a "surplus" of liquidity and you're trying to either hide it or spend it down. Either way, that type of planning requires legal advice.

[btbeme]

Assets, cash on hand, expenses, etc are viewed as a snapshot at the moment you file. However, the Trustee enjoys a very wide latitude in "exploring" that snapshot and the events leading up to it (and afterwards, ad. infinitum) should they smell something fishy. This is not their first rodeo. But, except for a few serial filers out there, this IS yours. While there are legal means by which to preserve some sense of financial dignity in a BK (these are called "exemptions"), I can guaran-damn-tee that anyone who plays "cute" with a Trustee is indeed playing with fire. Federal fire. Striped pajamas fire.

So, the answer to the above questions is pretty simple. Outside of legitimate exemptions, the Trustee steps completely into your skin and does what they feel is most legally prudent and necessary to pay your creditors should there be any means or reason to dispose of assets and convert them to cash. What you do immediately post-filing to keep on living is generally allowed. Life goes on. Unless the Trustee sees a reason to make your life miserable, they do not do so just to be mean.

Like a computer, the quality of the output depends heavily on the quality of the input. Being straightforward and honest means the fewest problems (and simpler cures for any problems that do crop up). A bank freezing a checking account because they mistakenly think are supposed to do so - than can be fixed pretty quickly. A checking account seized by the Trustee because they feel there is a pattern of fraud...not so easy to cure.

Really, really, really... I understand the motivation to try to do this yourself. However, if you have more at risk than just a few dollars (such as a business, other assets, hidden assets, etc) then it is time to lawyer up. You cannot do so without great pain and penalty after filing, which is the time that you will discover whether a Trustee is heading your way while pulling on a pair of rubber gloves.

[frogger]

To HHM

I’m from CA and am prepping & planning on filing for BK7 mid January.

That's your explanation????