It might surprise some people to know that someone with cash can still file for bankruptcy. As a matter of fact, you need to pay a fee in order to file so you need to have some liquid income to begin the bankruptcy process.
Despite struggling to make ends meet and needing to take the drastic step of filing for bankruptcy, it’s possible you’ll have some cash in a checking or savings account – or in your wallet – when you file for Chapter 7 bankruptcy. Not to mention you might accumulate cash throughout the course of your bankruptcy, through wages and various other forms of compensation.
What happens to your cash when you file?
Bankruptcy Exemptions Can Apply to Cash
When you file for bankruptcy, you and your attorney will discuss what assets you have and whether or not you can protect or exempt any of those assets. Most people who file for Chapter 7 have very few assets, but they still might have some.
Non-exempted assets can be used by the bankruptcy trustee to pay your creditors.
Cash can be exempted but there are guidelines concerning how much you can exempt and how the exemption is handled. The amount of cash you can exempt in a bankruptcy filing varies from state to state and may or may not be based on federal exemptions.
For instance, Florida does not use the federal exemption guidelines and the amount of cash that can be exempted depends on a variety of factors, including whether the cash is earmarked for anything and whether or not the filer has used the homestead exemption.
To learn more about Florida’s bankruptcy exemption guidelines, check out this information from Nolo.com.
The types of cash that might be able to be exempted include:
- Maintenance and support from a former spouse
- Victims’ compensation
- Insurance benefits
- Bank deposits
- Public assistance
- Pension and retirement income
- Veterans’ benefits
- Unemployment compensation
- Workers’ compensation
- Wages up to $750 per week or the greater of 75% or 30 times the federal minimum wage
Exemptions are Unique to Each Bankruptcy Filing
Determining how much and whether cash can be exempted in bankruptcy filing varies from person to person. This is one of the reasons it’s so important to work with an experienced bankruptcy attorney. He or she can help you protect all of your assets, including any cash you might have on hand or be receiving during the course of your bankruptcy.
If you have questions about how cash will be handled should you choose to file for bankruptcy or you need help filing, contact the Law Office of Robert M. Geller at 813.254.5696 to schedule a consultation.