Corona Virus Relief Payment HELP!

[RockSteady]

Will the BK court/trustee take the money from me if I file a Chapter 7? Do I need to delay filing until I spend the funds? I understand there maybe a check mailed second week of April and perhaps one in May. The funds would allow me to stock up on food and much needed clothes as I have lost so much weight. I have no intention of fraud, I just don’t know what to do.

ETA: I am awaiting on a consultation with a lawyer to happen next month. I’m just a nervous wreck right now with all that is going on.

[bcohen]

I suspect your bankruptcy trustee would treat these funds as a tax refund, and expect you to turn over any amount which exceeds your exemptions. Therefore, unless you are facing immediate action--such as foreclosure, eviction, or repossession--the smart thing to do is wait to declare bankruptcy until the funds are received and spent. And of course, you should spend the stimulus funds, as well as any tax refund on things which can be exempted, such as food, medicine, clothing and personal goods, home repairs, car repairs, etc.

[RockSteady]

Thank you bcohen. That’s my plan, is to spend down the funds.

[Jfrommz]

https://www.abi.org/newsroom/press-releases/senate-passes-coronavirus-stimulus-bill-with-provisions-providing-greater

“Amending the definition of “income” in the Bankruptcy Code for chapters 7 and 13 to exclude coronavirus-related payments from the federal government from being treated as “income” for purposes of filing bankruptcy.”

[despritfreya]

“Amending the definition of “income” in the Bankruptcy Code for chapters 7 and 13 to exclude coronavirus-related payments from the federal government from being treated as “income” for purposes of filing bankruptcy.”

This change for the purposes of Means Testing/Disposable Income has nothing to do with whether or not the funds are property of the estate and/or whether or not the funds will have to be turned over to a Trustee.

As BC references, unless you can exempt the funds, you might want to receive, cash and spend before filing.

Des.

[justbroke]

What despritfreya wrote, is exactly the problem I see. While most Chapter 13 Trustees may be nice, there have been other cases where a Chapter 13 Trustee has successfully gone after "stimulus" payments.

[Jfrommz]

What despritfreya wrote, is exactly the problem I see. While most Chapter 13 Trustees may be nice, there have been other cases where a Chapter 13 Trustee has successfully gone after "stimulus" payments.

Yes, definitely depends on your trustee as I found out that many of the absolute answers on this forum didn’t apply to my situation. I asked my lawyer with years of experience with my trustee if the trustee would take my tax refund (about $500) and she said, “most likely not.” And yet I read online that all trustees will take your refund with 100% certainty.

I also asked if it could get a secure credit card after confirmation, and the response was that as long as the security deposit was no larger than $1000, I didn’t need to inform the trustee. Again, never read this online because it was specific to my trustee.

Thus, “ask your lawyer” is good advice.

And anyone should at least talk to a lawyer even before getting the relief check. Law firms and the courts are going to be smashed with bankruptcy filings (if not already). You’ve been warned.

Don’t waste time creating a strategy of getting your relief check first and then trying to get an appointment with an overbooked BK lawyer. Stopping the debt payments will improve your cash flow and wild stress levels long term more than a $1000+ check could.

If they take the relief check, let them take it.

[shipo]

And yet I read online that all trustees will take your refund with 100% certainty.

I'm not sure where you read that, but it couldn't be further from the truth. Every locality is different; bizarre fact of the bankruptcy world; here in New Hamster the threshold is $1,250, all tax refund money above that will be requested by the trustee; you keep the rest.

[justbroke]

And yet I read online that all trustees will take your refund with 100% certainty.

This is entirely dependent on three factors; your plan language, district-specific trends, and how the specific Trustee deals with tax refunds. Some attorneys will factor the average refund into CMI (current monthly income) thereby it's already factored in. Some plans allow an individual to keep a certain "not to exceed" amount (e.g. $1,000). Some Trustees allow a similar not-to-exceed. And then, in some Districts, it's 100% of any refund, but even then you can write to the Trustee and ask to use the money for something important (I did the request 2 of 5 years).

Chapter 13s, and the plans so confirmed, are so fact and trustee-specific that there are no absolutes. Not on confirmation, not on plan contents, not even on the affects of Schedule I/J versus the Means Test.