When you file a Chapter 7 Bankruptcy, the Court will appoint a trustee who will review your case and try to determine if there is any way that he or she can get money to help pay your unsecured creditors. For more information about the trustee's role, check out my article on "understanding the role of a Chapter 7 trustee". One of the things that the Chapter 7 trustee may look at is how much money you had in the bank on the day that your case was filed. The trustee may also examine your bank statement to see if there are any recent transactions that raise concern, like a large withdrawal immediately before filing.
You must list all your assets when you file a Chapter 7 Bankruptcy and money in the bank or cash on hand is an asset. I once had a client who had a large sum of money in her bank account. I advised her that I would not be able to protect that money from the trustee and gave her several options of what she could do. She chooses to move the money from her account to her daughter's account, without telling me about it. Unfortunately, she ended up losing a couple of thousand dollars since she really still had that money in her control.
It will depend on your situation as to how much money you can have in the bank when you file a Chapter 7 bankruptcy. There are many factors that come into play in determining if the money in your bank account can be protected from the Chapter 7 trustee. One factor will be where the money came from. For instance, Social Security payments are treated differently than wages or a tax refund.
If you have questions about protecting money in a bank account or other assets, contact us or call us today at 757-276-6555. We will schedule you a consultation with an experienced bankruptcy attorney who will be able to analysis your situation and advise you on how to keep your assets.