Money in bank account

[kevinhellman]

I was wondering about a bankruptcy question. I took out some $5000 out of my account 3 months ago because I was scared of having it in my account and also wanted to have it on hand to ensure access to it. Plus, I also wanted to learn how to live cash-only all over again after decades of living off of plastic, figuring I likely am not allowed to have a bank account when bankrupt anyway.

My question is, if I applied for bankruptcy, will I get in trouble for taking that money out back then? Will they investigate my friends and family's bank accounts suspecting I am hiding the money there?

(I am in Canada)

[keptdigging]

whoops. never mind. I should learn to read in full... I know nothing of Canadian law, but it's got to be different.

[freeatlast98]

Bank Account question-Filing Pro Se

I know you have to declare on the day you file how much money is in your account. No problem with that because all that is in there is to pay bills. However, after filing can you still deposit money in your account to pay bills. Does the trustee freeze your accounts.
Also my mortgage is with BofA and I'm including my credit card with them in the bankruptcy. Is this going to create issues or are they separate issues. I'm current on my mortgage but always wait til the last day to pay. Sorry to ask but I really confused about this.

[JackBondLove]

So long as you can plausibly prove that you used it for non-luxury living expenses, there will not be a problem. As the previous respondent mentioned, technically, you would need to show receipts of where you had spent it (you would not need to show every single expense, as realistic expenses of $500/mo or so for food and other incidentals are OK.)

Now, if that cash is sitting under your mattress, then *legally* you would need to mention it, and would be forced to fork it over. And you can only prepay for services (e.g., insurance, rent, cable service, utilities, etc.) for one month in advance of the filing date.

As for the large withdrawal, that will most definitely be scrutinized, so you will need to answer the question of where that cash went. Had you taken out approximately $400/week (in different amounts), then there would be a good chance that it would not be scrutinized by the trustee. But since this has already happened, you need to be ready to answer the question, "so what happened to the $5000 withdrawal?", and answer it convincingly. The penalty for not answering it convincingly could be the dismissal of the case, which would be very bad for you.

Now, if you are worried about what you are going to do for money after you will have filed, that I can't answer. Unless your state has an exemption for cash, legally when you file for Chapter 7 (I'm presuming that's what you are planning to do), you are broke, kaput, tapped out. Obviously, the day after you file, you will need to eat, etc. Aside from stacking up your pantry (which you can store away a month's worth of food, just like for the rent), you will need some sort of income stream.

I'm not sure if you are working or on unemployment, etc., but if you have absolutely no income, you will need to scratch it out one way or another - ask a friend or relative to lend you some cash AFTER the filing (which you would legally have to pay him back, aside from the moral reasons to do so); the reason that it must be done AFTER is because it were to be done before, it would be considered as an unsecured debt to be addressed in BK just like your credit card. Or aside from that, plan on tapping your retirement accounts until you can get work. If you had no income, you would be eligible for Food Stamps (a Chapter 7 statement of assets is a great way to prove poverty!)

What you should do is figure out how long you need the $5K to live on - actually, you should think of it as $3.5K or whatever because you would be (or should be) hiring a BK attorney. Need to go to the dentist? Optometrist? Need new shoes (keep the old ones around to prove that they are beat up, etc.)? Then plan on the singular point of BK filing when your assets are ZERO. Go see an attorney 6 weeks or so in advance, and you should be able to hit that point. (I underestimated the time it took my attorney to do the paperwork, so I needed my mother to give me $200 so I could eat.) And you could always have a few hundred $$ around at the time of filing if you didn't want to hit it so close (as I understand it, for a small amount of cash on hand like that a trustee wouldn't bother with it.)

[JackBondLove]

I know you have to declare on the day you file how much money is in your account. No problem with that because all that is in there is to pay bills. However, after filing can you still deposit money in your account to pay bills. Does the trustee freeze your accounts.
Also my mortgage is with BofA and I'm including my credit card with them in the bankruptcy. Is this going to create issues or are they separate issues. I'm current on my mortgage but always wait til the last day to pay. Sorry to ask but I really confused about this.

If you are talking about a bank account at the same institution as a creditor, then on the day of filing you would lose it to that creditor, who would confiscate it on the day they learn of the filing. As for having it after the fact, that is a bit tricky. It is supposed to be that after the filing, the creditor should have no right of confiscation. But with so many alternative banks, why even take a chance? Just open up a new account at another bank and forget about it.

As for using a credit card even for convenience, while you may be able to get a secured credit card, I would recommend at first to just get a debit card. It is just about as good as a credit card, with the only possible issues being some fraud protection (which can be minimized by simply opening up multiple checking accounts and only having enough cash in one to pay any large purchase, etc.)

[freeatlast98]

All my Banking is done through Bof A. I have a business account and a personal account. I have a credit card for each.
I will include them in the bankruptcy. My mortgage is also with them. I'm self employed "sole proprietor" and deposit checks I receive written to my company in the business account. I'm late on the credit cards however current on the mortgage. I'm afraid as I pass money through the business account BofA will snag the money to pay for the cc's I have with them. I deposit my checks in there and pay my mortgage, utilities etc. I'm about 60 days late so far And plan to file chapter 7 in late July. Based on this time frame, what are the chances of them grabbing the money before I can pay my bills. I now have a Wells Fargo account "personal" however, not a business account. I have been taking money from the BofA business and depositing in the Wells Fargo personal and paying some bills that way.

[kevinhellman]

Thanks a lot for the responses.

@JackBondLove: thats pretty much the plan - keep the money aside and keep a receipt for everything and figure out how much money does it cost me to live for x number of months. Then plan to start the BK filing when the money runs out.

Do you think they would still scrutinize where the money went, even if I filed for BK 6-7 months later?

[AngelinaCat]

Hi Kevin: welcome to the forum. However, no one that I know of has any idea of how Canadian Law works, so please understand that while you are getting some good suggestions, they are probably educated guesses.

Are you able to schedule some free consultations with bk attorneys?

[kevinhellman]

Hi Angelina - yes we are able to get free consultations here in Canada. I think I am going to do that for sure.

[ozarkmiss]

All my Banking is done through Bof A. I have a business account and a personal account. I have a credit card for each.
I will include them in the bankruptcy. My mortgage is also with them. I'm self employed "sole proprietor" and deposit checks I receive written to my company in the business account. I'm late on the credit cards however current on the mortgage. I'm afraid as I pass money through the business account BofA will snag the money to pay for the cc's I have with them. I deposit my checks in there and pay my mortgage, utilities etc. I'm about 60 days late so far And plan to file chapter 7 in late July. Based on this time frame, what are the chances of them grabbing the money before I can pay my bills. I now have a Wells Fargo account "personal" however, not a business account. I have been taking money from the BofA business and depositing in the Wells Fargo personal and paying some bills that way.

Hi there,

Did you ever get an answer to this? My paycheck is deposited to a bank that also holds most of my unsecured debt. (I stopped paying those cc bills 2 months ago) Need to know if I need to get that paycheck sent to a new bank asap. Filing soon, but maybe not soon enough....

Thanks,
V

[doni49]

Hi there,

Did you ever get an answer to this? My paycheck is deposited to a bank that also holds most of my unsecured debt. (I stopped paying those cc bills 2 months ago) Need to know if I need to get that paycheck sent to a new bank asap. Filing soon, but maybe not soon enough....

Thanks,
V

I would run to the nearest bank first thing in the morning and open a new checking account. Then change the direct deposit to go to that new account ASAP.

I wouldn't want to take any chances.

[keptdigging]

I would run to the nearest bank first thing in the morning and open a new checking account. Then change the direct deposit to go to that new account ASAP.

I wouldn't want to take any chances.

My attorney advised me to do exactly the same thing.

[ccsjoe]

My attorney advised me to do exactly the same thing.

+1. Additionally, our attorney told us to avoid WF due to their history of freezing accounts.

[ozarkmiss]

took your advice and opened new account and redirected payroll check. Phew!