Getting sum of money before discharge

[brokehmowner]

Hello,

I am due to receive a check of approximately $3,500 in about 5 to 7 days. I did not know about this check coming to me until about 3 weeks after my 341 meeting. Even then I did not know when to expect it. I got a letter yesterday saying 5 to 7 days. My discharge date is December 2nd (about a week later). I did not meet the median income for filing chapter 7, but had NEGATIVE disposable income after means test. No problems at 341. This check has to do with a clerical error with some payments made quite some time ago. It is not going to be considered income for income tax purposes.

Do I have to report this to anyone? Should I just hold unto the check and don't cash until my discharge? I called and my jurisdiction normally closes the cases about 2 to 3 days after the discharge is scheduled.

Any advice would be appreciated! I have emailed by attorney but got back an out of office reply that he had surgery and won't be back until after I get this check.

[tobee43]

it was after your snapshot and you filed.

have a merry happy holiday and don't forget to try to save some of it

i have no clue where people get the idea that we are policed forever when one files. i know it's scary, but just keep the money, it's fine, you cheated no one.

[LadyInTheRed]

This check has to do with a clerical error with some payments made quite some time ago. It is not going to be considered income for income tax purposes.

Even though the error may not have been discovered until after you filed BK, it sounds like you were entitled to this money on the day you filed BK. It was an asset on the day you filed, even if you didn't know it existed. Your attorney may want you to amend your petition to include it. Hopefully, you have an exemption available to cover it.

[tobee43]

Even though the error may not have been discovered until after you filed BK, it sounds like you were entitled to this money on the day you filed BK. It was an asset on the day you filed, even if you didn't know it existed. Your attorney may want you to amend your petition to include it. Hopefully, you have an exemption available to cover it.

oh!! i'm so happy this was going to be a party pooper LOL!!

[LadyInTheRed]

oh!! i'm so happy this was going to be a party pooper LOL!!

You can rely on me to poop on a party with technicalities.

[tobee43]

You can rely on my to poop on a party with technicalities.

ROFL!! usually i cover my eyes in such great anticipation!!! waiting for that ouch LOL!! whoppee!! keep the money and save some!

[brokehmowner]

Thanks so much for both replies.

Lady, when you say "exemption" for it what do you mean? I remember my attorney saying something about being able to have an amount in savings that didn't have to be surrendered, but I can't remember what that amount was since I didn't have any savings anyway. I think, though, that was when we were discussing doing a chapter 13. Does that apply in a 7? Is that the exemption you referred to?

[AngelinaCatHub]

This is most difficult decision, I am sure....
If no mistake were made, what would you have done with that 3500 bucks? If it were me, I believe I would make no secret of this item and would update the paperwork. I don't believe you would have to shout it out to all people though. You are not required to make an effort to take special efforts to inform the Trustee, but you should notify the "Court" and that should suffice. Once the paperwork has been updated, the question in your 341 WAS, "has anything changed since you filled out the paperwork?" and it did not. After the 341, that "snapshot" is behind you. It is your money and would probably been spent to nothing before you filed, anyway. Hold the funds until all is over. Hide nothing but do your duty by informing (update your schedules) and you have done what is required. You then may just legally get bye without breaking the rules or law.

We don't promote fraud here, but extra ordinary broadcasting your own change in status is not required unless asked. My opinion only. 'Hub

[tobee43]

you already had your 341. you needed to disclose everything UP to that point. with the exception of an inheritance this money is yours and you don't need or should advise the courts...really as you point out hub. i have disagree with you here hub (love you tho ) keep the money and do not say anything. you aren't stealing you did nothing wrong and you are under no legal obligation to inform the court at this point.

for some reason many people that file BK feel they are not entitled to what you get in the future even if that future is a week after you file. you are. just let sleeping dogs lay.

[LadyInTheRed]

Thanks so much for both replies.

Lady, when you say "exemption" for it what do you mean? I remember my attorney saying something about being able to have an amount in savings that didn't have to be surrendered, but I can't remember what that amount was since I didn't have any savings anyway. I think, though, that was when we were discussing doing a chapter 13. Does that apply in a 7? Is that the exemption you referred to?

Yes, you have the same exemptions in Chap 7 as you do in a Chap 13. In some respects it is even more important in a Chap 7 than in a 13 because in a Chap 13 you can keep non-exempt assets as long as unsecured creditors receive at least the value of those assets during the plan. Based on my quick internet research, Maryland has a $6,000 exemption for cash or property of any kind. If you did not use all of that exemption, it can be used to exempt this newly discovered asset.

As far as the "snapshot" is concerned, on the day of filing, you were entitled to this cash whether you knew it or not, therefore it was an asset as of the date of the snapshot. I know you have contacted your attorney and you should follow his advice on this. You very well may have a legal obligation to disclose the asset, no matter how far your case has progressed. I don't know the answer to that question, but your attorney should. Nobody other than an attorney is qualified to tell you what your legal obligations are. Your attorney may say not to worry about it, especially if you have an exemption available to cover it. Your attorney may also say you need to file an amendment.

[bcohen]

This is new income after you filed. Unless it is from an inheritance, I don't believe you have any duty to notify anyone about it.

[AngelinaCat]

I think the question here is: "Did you know there was an error in your pay, and that there was a possibility that this would be corrected?" on the day that you filed?

The answer to that two-part question is the key.

As others have said, follow the advice of your attorney. He/she is the best able to advise you how to handle this. He/she also knows the temperament of your trustee, and how 'picky' that person might be.

[LadyInTheRed]

Do I have to report this to anyone? Should I just hold unto the check and don't cash until my discharge? I called and my jurisdiction normally closes the cases about 2 to 3 days after the discharge is scheduled.

Any advice would be appreciated! I have emailed by attorney but got back an out of office reply that he had surgery and won't be back until after I get this check.

Call your attorney's office and ask to talk to whoever is handling his cases while he is gone. I wouldn't spend that money until after you get advice from a BK attorney.

[tobee43]

again, i going to have to disagree with my most respected forum colleagues.

this was AFTER the fact. you are done, your snapshot is DONE GONE COMPLETED. it's like saying your parents; after your 341; helped do car repairs for $4k and should you now report this to the BK Gods. NO.

this money does not fall into any legal category which needs to be reported i stress at THIS stage of your bk in a 7. do not call your atty, do not call the courts, just go directly to park ave and then on to altantic ave and pass go.

again, this is scare tactics that really have nothing to do with your bk. most likely even if you had that money prior to your bk it would not have prevented you from filing. but that is not the point here. this is and was AFTER your 341.

believe me, an atty or a trustee will figure a way somehow to get those funds or could. i have seen unreal things happen to people, again my advise would keep it, tell your atty your had one too many martinis at lunch when you email him/her and have a great holiday. you are doing NOTHING illegal and this falls into NO category needing to be reported AFTER the 341.

[justbroke]

I'm sorry, but here is some more poo.

I know that this is the worse scenario that people want to happen. That is, file bankruptcy, and then, just before the bankruptcy is discharged/closed (not that it really matters), some "old" but expected money comes through. The "unexpected" money could be from a relative that owed you thousands from years ago, or some back pay that your job owed you. The key is whether it was an obligation that was due you prior to filing.

The term for this is a late discovered asset. These are assets that would have been a part of the Estate on the day of filing. These types of assets, of the late discovered variety, can be recovered even years later by the Trustee, so long as the Trustee acts within 1 year of knowledge of this asset type. In other words, late discovered assets are always recoverable on behalf of the Estate.. even years after close. (An unpaid debt is an asset of the bankruptcy estate if the right to payment was prior to filing!)

The best advice has already been given. Seek counsel from your attorney and then follow their directions. This may or may not include amending your Petition and exempting the funds.