What do you need to know about the handling of cash assets in bankruptcy?
When you file for bankruptcy, your cash becomes part of your estate. This means that the bankruptcy trustee can use it to pay your creditors.
However, there are some exceptions. If you have cash in a protected account, such as a retirement account, the trustee cannot touch it. You may also be able to keep a certain amount of cash if you can prove that you need it for essential expenses.
Protecting Cash Assets When You File
There might be some things you can do to protect your cash when you file for bankruptcy. Make sure you work with a bankruptcy attorney to ensure anything you do before you file for bankruptcy is legal and won’t put your case at risk.
Some people choose to invest cash into retirement savings accounts that might receive some protection from bankruptcy. Keep in mind, the bankruptcy trustee evaluates any large amounts of money you spend or invest before filing. It can still be recovered by the court if they deem the investment inappropriate.
Consider a Secured Credit Card
A secured credit card can help protect your cash from bankruptcy.
Many worry they’ll lose their assets due to massive debt. A secured credit card can help by giving you a way to keep your cash safe.
With a secured credit card, you put down a deposit that secures the credit line on the card. This deposit is typically equal to the credit limit on the card. If you default on your payments, the issuer can use your deposit to cover the owed amount.
Because the deposit secures the credit line, issuers are often willing to give secured cards to people with bad credit or no credit history. This can be a good way to build or rebuild your credit.
Just make sure you choose a secured card from a reputable issuer and that you use it responsibly. If you do, you can help protect your cash from bankruptcy and improve your credit score at the same time.
How Does Chapter 7 Bankruptcy Affect Future Income?
For the most part, it doesn’t.
One of the biggest concerns people have about filing for bankruptcy is what will happen to their income. Will they be able to keep their job? Will they be able to find new employment?
The good news is that, in most cases, chapter 7 bankruptcy doesn’t affect your income. You will still be able to keep your job and, in most cases, find new employment.
The reason your income is not affected by bankruptcy is because bankruptcies are designed to give you a fresh start. That means that your creditors cannot come after your income to try to collect on the debts you owe them.
Of course, there are exceptions to this rule. If you have a lot of income and few expenses, the bankruptcy court may require you to use some of your income to pay off your debts. But, in most cases, your income will not be affected by chapter 7 bankruptcy.
Remember, if you file for Chapter 13, you’ll use future income to meet your payment obligations. This is not the case with Chapter 7 since there is no payment plan.
If you are struggling with debt, bankruptcy is an option that can help you get back on track. But it’s not the right option for everyone. If you’re concerned about the handling of cash assets in bankruptcy, an attorney can help. To learn more, contact the Law Offices of Robert M. Geller at 813-254-5696 to schedule a free consultation.