What would happen?

[NekoInu]

I'm planning to file for Chapter 7 in a few days but I'm wondering if the trustee or anyone cares about my income & spending once I've filed.

I'm wondering since I was in a car accident a while back and a settlement is probably going to be reached within a week. So I'd end up with a check worth something in the range of 10k being deposited into my bank account just days after filing. Then I'm going to go buy a car since I don't have one now (and filed as not having a car). Right now I'm expected to have a no asset case.

So basically, would they care? I would think if they found out that I got 10k a few days after filing I'd have a problem, but I've also heard that once you file, say on 04-10-07 that anything you do beyond that date doesn't mater.

[CATCHMEIFYOUCAN]

Hmmm, thats tricky because one of the questions is about "coming into money," and IF they find out that your getting a settlement from an insurance claim (accident), your case could/would get dismissed if you didn't disclose that info at the 341.

Best Wishes, CMIYC

[jal1129]

We were asked several different times (by lawyer, thru paperwork and also by trustee) if anyone owed us money, were we a part of any law suit, and that same basic question several different ways. It seems the trustee was even asking people if they had been in an accident and expecting a settlement. So I would think it would definetly come up.

Also I believe as part of the bk law if you come into money within 180 days of filing the trustee can take it.

Also as part of the patriot act I am thinking that banks have to report to the gov any checks of 10,000 or more.

If I were you I would discuss this with your lawyer and see what he/she has to say about it.

[keepmine]

Absolutely discuss this with your lawyer. In some states, personal injury settlements are exempt property.

[HHM]

DO NOT FILE BK until you get this aspect of your case fully explained to you. Personal Injury settlements are ASSETS like any other asset because the event that gave rise to the settlement, the car accident, occured before you filed BK (when you actually get the check is immaterial)...many states provide an exemption for the settlement, but also in many states, the exemption only applies in a very limited way (making some of the settlement exempt and some not)

The main issue is the exemption levels in your state....my initial advice would probably be to wait to file BK...get the check first, buy the car, then file BK. But that course of action depends on the equity exemption for a car you have available.

[NekoInu]

Well according to a lawyer in the area "You have to list the potential proceeds from the accident claim as a contingent asset on your Schedule B. If it's the result of a lawsuit, you also have to list the lawsuit on your Statement of Financial Affairs. Of course, you can exempt the proceeds as those of personal injury on your Schedule C. But you MUST disclose all of your assets, present and anticipated. "

Apparently California has "Personal injury recoveries to $17,425" under exemptions, so I'm guessing they won't be able to take any of it (which is good since that's pretty much all I'd own for the time being)

[SinkingFast]

Apparently California has "Personal injury recoveries to $17,425" under exemptions, so I'm guessing they won't be able to take any of it (which is good since that's pretty much all I'd own for the time being)

Many States don't allow for a very sizeable Motor Vehicle Exemption. So when I read this comment, I was concerned. While your Insurance Settlement may be covered, once you purchase the car, you may convert your Exempt insurance settlement into an asset you cannot cover with a Vehicle Exemption.

California has a 2 Tier, or Scheme, Exemption system. You, or your attny, chooses which one works best for you. Evidently your attny selected Scheme 2.

Under Scheme 2, the Vehicle Exemption limit is $2775. But it seems that you can apply the Homestead Exemption as a WildCard to protect any property.

Homestead

* Real or personal property used as residence to $17,425
* Unused portion of this can be used for any property
* not as fancy as other system
* more bullets over there

http://los-angeles-bankruptcy.net/ca...exemptions.htm

If that is indeed the case,............. That the Homestead Exemption of Scheme 2 can be used as a WildCard to protect any property,............ Then you should be OK. You can cover the Insurance Settlement. And if you purchase a car with that money, the car could be covered too.

As HHM suggested,............ Be sure to clear this with your attny prior to proceeding with the purchase of a car.

[twuoo]

Sounds like you'd be bettere off to buy the car, but only put the exempted amount as a downpayment.

That way, you still have a nice car, but with not much equity.

[HHM]

Also too, there may be issue once you "deposit" the check. Once you "liquidate" the insurance proceeds into cash, there is a good chance that it is no longer exempt (I know this is the case in several states).

You may want to get a lawyer to help you on this one...there are too many variables involved for this forum to be of any meaningful help except to point out potential pitfalls, you will need to see a lawyer in your state to find out what the best course of action would be.

[bige1030]

If you had gotten into a car accident after filing, and someone owed you money for that, it'd be different - the settlement wouldn't be part of the estate.

However, you got into the accident *before* filing - and what really matters is that you had a claim against someone else as of the date of the accident. It doesn't matter when you collect - the claim is part of the bankruptcy estate if you file after you acquired that claim. So you would need to somehow exempt it or spend it down before filing. If you got it after filing, the trustee could seize whatever you cannot exempt for the benefit of your creditors.

[NekoInu]

Well after further investigation, it looks like my safest bet is to wait a while, buy a car (used so it's fully paid for) and then file for ch7 under exemptions scheme 2.

Since I dont own/rent a home, living with someone else for the time being, I'd be able to use the "$17,425 homestead" as the unused portion can be put toward any property. Then I'd still have a no asset case; quite frankly everything I own right now (cash & assets) is worth less than $17,425. So I shouldn't have any problems.