Question Several questions need your input.

[ATC]

(1)Has anyone ever heard of this happening:

If you bank or have investments at an institution to which you owe money, on a loan or a credit card, that institution probably has the right under state law to take your money on deposit and apply it to your debt to them.

Thus, if you file bankruptcy owing a bundle on your Big Bank credit card, Big Bank can take the contents of your checking account at Big Bank on the day you file to pay the credit card bill.

So, good planning says "don't have your assets in institutions to which you owe money. "

(2) I live in Southern California and would like to know If I file Chapter 13 am I allowed to put money away for retirement. My employer mathches the 1st 5% that I contribute.

(3) If I include a rental home in my Chapter 13, and I surrender the home, Does the Bank still send me a 1099C for next year taxes. The home is only worth around $120,000 and We owe around $190,000?

Thanks in advance for your advice

[forgotten]

(1)Has anyone ever heard of this happening:

If you bank or have investments at an institution to which you owe money, on a loan or a credit card, that institution probably has the right under state law to take your money on deposit and apply it to your debt to them.

Thus, if you file bankruptcy owing a bundle on your Big Bank credit card, Big Bank can take the contents of your checking account at Big Bank on the day you file to pay the credit card bill.

So, good planning says "don't have your assets in institutions to which you owe money. "

(2) I live in Southern California and would like to know If I file Chapter 13 am I allowed to put money away for retirement. My employer mathches the 1st 5% that I contribute.

(3) If I include a rental home in my Chapter 13, and I surrender the home, Does the Bank still send me a 1099C for next year taxes. The home is only worth around $120,000 and We owe around $190,000?

Thanks in advance for your advice

1) If you have already filed, they can't apply the money to your credit card, that would be violating the automatic stay. They can however freeze the money to "protect" an asset of the bankruptcy estate. If you are late and haven't filed yet they can however take the money and apply it to your balance however.

2) Yes. You would at least be able to contribute up to the matching max.

3) No. There is no tax liability for anything discharged in bankruptcy.

[ATC]

Thank you for the quick response. One more question if you don't mind. Does it matter if i do a Deed in lieu of foreclosure then file chapter 13. I'm about 6 months late on my rental property and I am pretty sure BofA is going to foreclose on this property pretty soon, I want to wait to file Chapter 13 for another 4-5 months. BofA keeps calling me and asking me for the final paperwork so they can do the Deed in Lieu of for me. I'm worried about the tax consequences if I agree to this now but file Chapter 13 later.