Bankruptcy trustees gain access to a variety of your assets when you file. But what is considered an asset in bankruptcy? Is your savings account at risk and do you need to worry about the trustee taking money out of your bank accounts when you file?
Here’s what you need to know.
In general, you’ll be able to protect your savings and checking accounts when you file. The bankruptcy court will not confiscate or force you to close down your accounts. However, the money in those accounts is a different story. It doesn’t always qualify for an exemption in bankruptcy.
Savings Accounts are Not the Same as Retirement Savings in Bankruptcy
The bankruptcy court does not offer protection for most of the money in your savings account when you file for bankruptcy. Unlike retirement savings and other types of accounts that don’t allow penalty-free access like regular checking and savings, the trustee can take the money in your accounts unless it came from exempt sources. Money received from public benefits is an example of an exempt source.
The key to knowing what is considered an asset in bankruptcy and protecting those things is the exemption. When you file for bankruptcy, you and your attorney will review your assets and determine which ones qualify for an exemption. Whether or not you can protect the money in your savings account varies from situation to situation.
In some cases, people who file for bankruptcy get to keep a small amount of the cash they have on hand when they file. This includes recent wages you’ve earned from your employer.
The court exempts money from child support or alimony payments. The same is true with public payments such as disability payments, Social Security payments, and unemployment benefits. Other income protected from the trustee includes victim compensation payments from the government, and wrongful death and personal injury payments.
Florida’s Bankruptcy Wildcard Exemption
Florida also offers a wildcard exemption. This allows people filing for bankruptcy to exempt up to $4000 of personal property if they are not claiming a homestead exemption.
To learn more about Florida bankruptcy exemptions, check out this information from Nolo.com.
Every situation is different, which is why it’s so important to work with an experienced bankruptcy attorney. What is considered an asset in bankruptcy might not be the same from situation to situation. An attorney understands bankruptcy laws in your state and can help you figure out how to apply those laws to your situation.
Even if the money in your savings account qualifies for protection, you must still notify the court about this money. Failing to list information about your accounts when you file for bankruptcy can lead to the dismissal of your case. Or worse. You could face accusations of fraud or trying to hide assets. You must reveal all information about how much money you have when you file.
Banks Usually Don’t Offer Much Protection in Bankruptcy
Also, it’s important to note that even if the trustee does not have access to the money in your bank accounts the bank does. If you have a credit card or loan as well as a savings account with the same bank, the bank has the right to set-off the account. This means the bank can recover its losses from the funds in your checking or savings account. The automatic stay does not protect you from setoffs. Unless the money in your account qualifies for an exemption, the bank can freeze your accounts whenever it chooses.
An Attorney Helps You Determine What is Considered an Asset in Bankruptcy
If you’re thinking about bankruptcy and you’re concerned about the money in your savings account, it’s important to understand what you can protect and what is considered an asset in bankruptcy. This is especially true if you don’t know what is considered an asset in bankruptcy. To learn more or to speak to someone about your bankruptcy options, contact the Law Office of Robert M. Geller at 813-254-5696 to schedule a free consultation.