Filing Chapter 7 Due to Unemployment - Mutual Fund Question

[Idjut]

Hello all. In a previous post I wrote how we were all set for a Chapter 13, but then I lost my job. Even though we were over median, my attorney says we will qualify for a Chapter 7 now due to the loss of income and no money left over to fund a plan payment. We're planning to file in early July.

My question is we have a small mutual fund worth around $700. We really need the money to cover bills since I have no income. If we cashed that out and used it to pay necessary household bills before filing and kept receipts, is that a problem? It's my understanding it is not exempt, and if we don't spend it, we will lose it.

[Pizza]

If you decide to cash it, make sure that you are using it just as you said - necessary household bills & expenses. And keep tabs on it.

It is also possible to exempt cash and cash-like assets using wildcard and unused home equity. $700 is a rather small amount of money from an exemption standpoint.

[LadyInTheRed]

Cashing it and spending it on necessary expenses shouldn't be a problem. If you get a check from the mutual fund, keep a copy and a record of it being deposited to your checking account. If the funds get transferred electronically, the transaction will show up on account statements that you can show the trustee if he asks questions. Make sure your attorney knows that you cashed out in case it needs to be listed on your statement of financial affairs.

[LadyInTheRed]

It is also possible to exempt cash and cash-like assets using wildcard and unused home equity. $700 is a rather small amount of money from an exemption standpoint.

Good point. According to Nolo, Ohio has a $450 cash exemption and a $1225 wildcard exemption.

[Idjut]

We are filing jointly, so we will be able to exempt $900 cash. Our wildcard exemptions are being applied towards a truck we are going to keep. It's worth $8500, but the auto exemption and wildcard exemptions will cover $6100. We will be paying the difference to the trustee, as we live in a rural area and the truck is a necessity...especially in the winter. We also have a 2002 Dodge minivan worth $2,200 that is exempt, 2012 Camry with no equity, and a 1991 Oldsmobile that my daughter drives back & forth to school that is only worth around $750.00. Attorney says trustee won't have any interest in it, since it's under $1,000.

The mutual fund cash out will be done electronically to our checking account, so there will be a record. We're also spending approximately $1600 in savings before filing on necessary bills. With house & car insurance and property taxes due in the next few weeks, it will go fast. By my estimation, we should have around $500 in the bank on the day we file.

[ksgirl38]

I had over $1500 in mutual funds I cashed out shortly before filing and they were never even questioned, I wouldn't worry about $700 if you are using it to pay bills.