Unemployment Exemption

[justbeach03]

I read this in another old post and just wanted to repost here, so that others might not be taken down the wrong path. I was told to spend account down to zero and file. Attorney never told me i could exempt unemployment.

HAD I NOT FOUND THIS FORUM I WOULD BE OUT A FEW THOUSAND IN EXEMPT "FRESH START" MONEY! Thanks to everyone who posts and continues to ask questions!

[AngelinaCat]

Actually, our attorney never told us that either. We also were told to have the account as close to 'zero' as possible. We were actually in the negative when we filed. But as my Unemployment only paid a couple hundred dollars every week, it was spent pretty quick, and there was nothing in reserve.

Good luck~~~

[tobee43]

I read this in another old post and just wanted to repost here, so that others might not be taken down the wrong path. I was told to spend account down to zero and file. Attorney never told me i could exempt unemployment.

HAD I NOT FOUND THIS FORUM I WOULD BE OUT A FEW THOUSAND IN EXEMPT "FRESH START" MONEY! Thanks to everyone who posts and continues to ask questions!

when...yes, and no...........yikes...

in this wondrous state it depends on your county.....our EI was exempt...however, the NEXT county over WAS NOT exempt!!!!!! and we are all in the same middle district....nuts to say the least.

we would interview an atty in one county who would insist it was NOT exempt...(true...not where his firm was), and then go to another firm in OUR county and the firm would say YES...it's absolutely exempt...boy was i confused...

it was in FACT exempt however, listed as "temporary" income on the schedule....and the trustee did NOT consider it as income...

[helpme2010]

In California, you are allowed to keep I believe a couple thousand dollars in the bank, plus I think up to 5k in a car, and several thousand in possessions. Read that information carefully for your area. A good attorney can help you go over this info. If you are unemployed like me, having a couple thousand reserve is important during bk. As it is very difficult to start building up a reserve after you file bk, if you are just breaking even.

[justbeach03]

tobee- interesting on the "county disconnect". My attorney didn't say what the total allowable exemption was...do you know? And if it's exempt, as a non-consumer, it has to be seperated from regular accounts...is it ok to put it in an IRA?

[tobee43]

tobee- interesting on the "county disconnect". My attorney didn't say what the total allowable exemption was...do you know? And if it's exempt, as a non-consumer, it has to be seperated from regular accounts...is it ok to put it in an IRA?

justbeach....i know it was just listed as "temporary" income on the schedule and accepted by the trustee...i would find out first if it IS in fact, exempted income or considered so in your county. intersting question about the retirement account...however, i'm not thinking one would be asked what are you going to do with your future EI after your discharge and close. so i would really consult your atty, as you need to be careful and also...you can look it up county by county in floridia....just put in your zip and in your means test down by county it should tell you.

http://www.legalconsumer.com/bankruptcy/means-test/state.php?st=FL

[SunshineGal]

I think Justbeach and Tobee are talking about two different issues. Justbeach seems to be talking about the money from unemployment deposited into a bank account, where Tobee is talking about her unemployment income being exempt on the means test. It seems the income portion seems to vary by courhouse, judge or location, not really sure but I had to include it on the means and I'm also in Florida. As for exempt in a bank account, I'm not sure how much you can exempt but if you can, then it shouldn't vary at all since it's in the FL statutes.

[tobee43]

I think Justbeach and Tobee are talking about two different issues. Justbeach seems to be talking about the money from unemployment deposited into a bank account, where Tobee is talking about her unemployment income being exempt on the means test. It seems the income portion seems to vary by courhouse, judge or location, not really sure but I had to include it on the means and I'm also in Florida. As for exempt in a bank account, I'm not sure how much you can exempt but if you can, then it shouldn't vary at all since it's in the FL statutes.

you're right... i re-read and i do believe that's the case. justbeach is referring to the bank account amount and i was referring to the exemption on the means test.

i believe we were only allowed $150 in the bank account and a 401....which we already blew on attempting foolishly to catch up.

[justbeach03]

sunshine- You are correct! First off- I'm a non-consumer bk7, so means test doesn't apply...thank goodness, cause everything surrounding it sounds soooo stressful. As if this whole process isn't stressful enough. tobbe- What I'm talking about is- If the unemployment income is exempt, can I save some and put it in an IRA? Or just put it in a savings account for that "fresh start"? And if yes, how much is exempt? Remember no means!

[tobee43]

sunshine- You are correct! First off- I'm a non-consumer bk7, so means test doesn't apply...thank goodness, cause everything surrounding it sounds soooo stressful. As if this whole process isn't stressful enough. tobbe- What I'm talking about is- If the unemployment income is exempt, can I save some and put it in an IRA? Or just put it in a savings account for that "fresh start"? And if yes, how much is exempt? Remember no means!

In the case of Rousey v. Jacoway, the United States Supreme Court ruled unanimously on April 4, 2005 that under section 522(d)(10)(E) of the United States Bankruptcy Code (11 U.S.C. § 522(d)(10)(E)), a debtor in bankruptcy can exempt his or her IRA from the bankruptcy estate.[5] The Court indicated that because rights to withdrawals are based on age, IRAs should receive the same protection as other retirement plans. Thirty-four states already had laws effectively allowing an individual to exempt an IRA in bankruptcy, but the Supreme Court decision allows federal protection for IRAs. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 gave further protection to IRAs. Up to $1,000,000 of IRA assets can be exempt from a bankruptcy estate; this now includes both Traditional and Roth IRAs. The 2005 Act also increased the FDIC insurance limit for IRA deposits at banks.

however, what is not answered in this case, is whether there were additional monies added to the IRA during the time of filing. so, personally, i would consult my atty about the status of protection of the money going into an account based on the "future"...i mean, i don't exactly know how well it would sit with a trustee explaining, yes, i get 2k from unemployment and i'm putting it in an IRA.

i can tell you this tho....we saved ours...every dime to put on this house. we personally, were never asked what we did with our UI checks.

[justbeach03]

tobee- when you say- you saved your UI for the house, was that saved money that was spent before filing or did you exempt in during filing? I think I will just skip the IRA and just set the money aside. No questions and if the trustee wants it, I can just had it to her.

[tobee43]

tobee- when you say- you saved your UI for the house, was that saved money that was spent before filing or did you exempt in during filing? I think I will just skip the IRA and just set the money aside. No questions and if the trustee wants it, I can just had it to her.

to be exact, and honest this is what we did:

our UI was directly deposited into our one of our checking accounts. plain for everyone to see the "in" and "out" baisis. we then withdrew it put in our mattress, hoping to purchase this house directly from it's owner in the following year. so, we did. just that made an offer this past dec., it was accepted and the this was a RARE owner owed property here in florida and he's holding the mortgage. we used every dime of our "saved" UI money for the house and our SS and a small pension to live on.

our trustee...LOL!! you may get the same one, she never asked us. she had ALL our bank statements showing the funds. we listed them on our petition and on the schedule, but used the word "temporary". so, i suppose she drew her own conclusions, that, and the fact, we lost our home after 33 years, our car, our 401, owned over 200k in medical bills...sold everything of value we owned including clothes...we literary had the shirts...on our backs..there wasn't much left other than our one car. that was it.

in as much as the allowed $150 in the checking accounts...well, we paid everything via the checking accounts ..we had and have two, one at credit union and one at a small community bank, they both had auto deposit, so we cut the paperwork for both us and the trustee as for providing income etc. we paid ALL our expenses via these accounts and once again, she could see the absolute consistancy of our in and out basis although the day we had our 341 we had over 2k in the account it was earmarked for rent, medical bills, utilties etc...(since it was close to the first and we didn't send out the bills as yet). once again, the best way to assure you are "safe" is to be truthful and forthright....and i'm certain you'll be fine.

[justbeach03]

tobee- Thanks for the clarification. Congrats on recent home purchase. I'm in NW FLa, so wont get same trustee. Think it will definately be better just to direct depo and withdrawl it to the matress until needed. Thx

[daylate]

I think in order to put the money into an IRA it has to be earned income. UI is not considered as such. However if your spouse is working then you might be able to do what is known as a spousal IRA depending on age, income, etc.

[tobee43]

justbeach, good luck with it all....

daylate, yes, for an IRA, it does have to earn income..good thinking!!!!!