How much cash on hand is too much?

[moo]

My wife and I plan to file Chp7 sometime this year (not sure when yet) and we live in Michigan. We have been told that we are a very simply chp7 case. We don't have much and was wondering how much money can you have on hand at time of filing?

I tried looking at the exemptions and seen where you can you the housing as a wild card. Is cash considered part of the wild card or not.

Once we receive our tax returns we will have about 9000 in the bank. Not sure if we can exempt it or will we have to spend it down.

Thanks in advance for your input.

[anykey]

that is too much. more of it should be in your mattress.

[HakunaMatata]

If you're using federal exemptions and have unused homestead, you can likely protect your tax return provided you don't have any other assets you wish to protect (unused real property exemption is approximately $10k).

[BKDefender]

moo,
If your state exemptions allow it, or if you're in federal exemptions which allows it, you can put your money in a Roth IRA, file bankruptcy, and then take it out after you file. You can fund up to $5k/yr for you and $5k/yr for your wife. If you have more and you create them before April 15th, 2010, you can even fund up to $5k/yr for 2009 each for you and your wife. i.e. you can sock away $20k, file BK, and take it out later. The only downside is if you withdraw it before 5 years is up you pay a 10% penalty.
You should take a look at it.

--William

[BKInLA]

Do you have any secured debt that you could use some of the cash to do a Redemtion (assuming you were going to keep any of it)?

[anykey]

or simply stock up on food. prepay some utilities.

[moo]

What would happen if I were to get some cash back at every purchase I do and then put the money under the matress? Do they look into the actual transactions that much? We have one car that we will be reaffirming, but we don't plan to reaffirm the house. Other than that we only have credit card debt and student loans left.

[HakunaMatata]

Hiding assets is fraud. Not recommended.

Discuss this with your attorney. I filed in Michigan, surrendered my house, and exempted $5k in cash. I could have exempted double this amount...if I had it.

[anykey]

food does not count as an asset. it isnt too hard to spend money on food these days.

[BKDefender]

moo:

Don't hide money from the trustee when you can disclose it and still keep it. Why risk loss of your discharge or even federal criminal charges when you can disclose everything and the trustee still can't get it from you.

--William

[fireworks]

In our case the magic number is apparently $5000. The dollar amount all depends on your exemptions, which depends on your particular case and jurisdiction, and which set of exemptions (state or federal) you're using. This is a question for your lawyer. Do SOMETHING with the money before you file - there's no sense in letting the court take it.

[moo]

Thakns to all,

I have no intention of hiding anything from the trustee. We don't have much of anything and wanted to make sure we could exempt some if not all the money because we don't plan to reaffirm the house and will eventually need money for a move.

Thanks again.

[wantout]

IMO, be open and honest with the TT. Ask your attorney for advice on what to do.

[Fallonedward]

Hiding assets is fraud. Not recommended.

Discuss this with your attorney. I filed in Michigan, surrendered my house, and exempted $5k in cash. I could have exempted double this amount...if I had it.

I'm in Michigan as well and will be trying to keep the house, it underwater and has no equity but my son is in high school and I want him to finish. Do you know what you can exempt in cash. I'm hoping that I can file sometime in the 7th to 12th day of the month and in this way I will have paid the mortgage.

Can you tell your attorney to file on a certain day?

[HakunaMatata]

Please give some strong thought to your notion of keeping an underwater property. Your son's high school days will pass quickly. The housing market here is not going to improve at the same pace. Bankruptcy offers you a life jacket; staying underwater defeats the purpose. If you're underwater, don't reaffirm. You can likely continue to stay in the house provided you submit payments.

The amount of cash you can protect depends on which set of exemptions you use. Michigan permits residents to use Federal exemptions (in which $10k+ in unused homestead can be applied to any property, including cash). Yes, you can coordinate a particular filing day with your attorney.