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Can I Have Money in My Account When I File?

by Adam Mack

One of the most important services a qualified Kansas bankruptcy lawyer can provide is a good filing strategy.  One of the most common mistakes that could easily be avoided with good strategy is filing bankruptcy with money still in your financial accounts (such as checking or savings).  Any money in your financial accounts at the time you file bankruptcy must be surrendered to the trustee.

When you file, everything you own becomes part of the bankruptcy estate as a matter of law.  This includes real estate like your home, tangible personal property like your car or clothes, and intangible goods like intellectual property.  These items must all be listed somewhere in the petition schedules (specifically, in schedules A, B, D, E, and F).  Much of your property is protected by various exemptions, allowing you to keep it.  However, money sitting in a checking, savings, or other financial account has no such protection (with only rare exceptions).

This is where a good bankruptcy strategy comes into play and timing becomes critical.  If you file bankruptcy the day after your paycheck is deposited, that money will be lost to the trustee, even if you’ve written checks against that amount.  A better strategy is to file on a day in which the account balance is low and all the outstanding checks have cleared.  What if you have a significant balance left in your financial account after all the bills have been paid?  If you use that money to pay creditors, the trustee will turn around and collect the money from them.  A better strategy is to use that money to purchase something useful and allowed under the bankruptcy code, like needed repairs on your house or on a car you plan to keep.  Of course, frivolous or unnecessary purchases can get in you hot water with the court, so it’s best to consult a qualified Kansas bankruptcy attorney to help you file.  He or she will know all the ins, outs, and strategies to filing.