Can I Keep Cash in Chapter 7 Bankruptcy?
You can keep cash when you file for Chapter 7 bankruptcy, but only if the cash qualifies as an exempt asset. Read on to learn how bankruptcy exemptions can protect your cash if you file for Chapter 7 bankruptcy.
Cash That May Be Exempt
Examples of cash or assets readily converted to cash which may be exempt, depending on the exemptions available to you, include:
wages (learn more about protecting wages in bankruptcy)
IRAs or other exempt retirement accounts or benefits
unemployment benefits
public assistance
cash or bank balances covered by wildcard or personal property exemptions
cash in a bank account owned by a husband and wife when only one spouse files for bankruptcy and the non-filing spouse does not owe the debt
social security proceeds (even if the funds have been received and are held in a bank account as long as they can be traced back to their source), and
personal injury proceeds.
Cash That Is Not Exempt
As a general rule, cash that represents proceeds from an exempt asset that is sold before you file for bankruptcy generally loses its exempt character. For example, if you are entitled to a $2,500 motor vehicle exemption and you sell your car prior to filing for bankruptcy, the sale proceeds cannot be claimed as exempt under the motor vehicle exemption.
Exception. Social Security proceeds are an exception to this rule, as they retain their exempt status as long as they can be traced back to their source.
No comments:
Post a Comment