Amount Of Cash Allowed To Keep When Filing Chapter 7
It is possible to keep cash if it is among exempt assets as per applicable Chapter 7 bankruptcy laws. While Chapter 7 laws may be similar in many jurisdictions, Chapter 7 petitions in a place like Austin TX will differ from other states with respect to state exemptions.
Generally, you aren’t expected to give up all you have, including all cash in your bank account, when you file for Chapter 7. However, the amount of cash you can be left with is dictated by factors like state exemptions.
Most states won’t allow you to protect a lot of cash. However, there are legal avenues that can be utilized by a seasoned bankruptcy attorney in Austin TX to protect as many assets as possible in your Chapter 7 Austin, TX bankruptcy case.
Here are notable variables explaining the parameters used to dictate how much cash you can keep.
State Exemptions On Cash During Chapter 7 Bankruptcy
You can protect your cash using bankruptcy exemptions applicable to Austin Texas, or the state in question. Individuals who file for bankruptcy and get their debt discharged agree to have their non-exempt property taken by bankruptcy trustees to pay for unsecured debt.
If an asset, property, or certain cash amount has been listed as exempt under the applicable state bankruptcy exemption, it can be kept. The exact amount you can keep is dictated by the laws of a state. Some states will have a definite amount that is protected. Other states have special exemptions known as wildcard exemptions that allow a person to protect any kind of property (including cash) to a specific dollar amount/limit.
If your state exempts $3,000 dollars in cash and you have $4,000 in cash, you can keep $3,000 and surrender $1,000. If the state has a $4,000 wild card exemption, you can use it to keep the cash.
If you have more cash than what state exemptions or wildcard exemptions protect, it is advisable to seek legal assistance. The same applies if you have a substantial amount of cash that is at risk. Bankruptcy lawyers are the best professionals to consult on bankruptcy-related matters.
When talking of cash that is exempt or non-exempt in Chapter 7, there are distinct types of cash that stand out. Some assets that can readily be turned into cash are also considered cash. Generally, most states protect certain types of cash from being seized in bankruptcy proceedings. The cash includes but isn’t limited to some exempt retirement/benefits accounts, wages, public assistance, unemployment benefits, personal injury proceeds, and social security proceeds (provided they are in a different bank account).
If social security cash benefits are held in the same accounts with money from many other sources, they become non-exempt.
If you sell property that qualifies as non-exempt before filing for bankruptcy, you are bound to lose cash proceeds from such a sale. The same applies to selling exempt property. Cash proceeds from such sales don’t enjoy exemption protection.
Assuming you are entitled to a car exemption of $3,000, and you sell your car before you file for bankruptcy, you will lose such cash proceeds. Ideally, assets that enjoy any form of exemption should be left as they are. Selling anything before filing for Chapter 7 may look suspicious and lead to your petition being rejected.
However, there are some exemptions that can be utilized to protect proceeds from certain sales for a specified period of time. Social security cash also retains exemption provided their source can be traced. The cash can be moved around, but it can’t be mixed with other monies.
You need a seasoned bankruptcy attorney in Austin TX, to tell you what you can and can’t keep in regards to cash in Chapter 7 bankruptcy.
Cash & Related Exemptions Applicable To Austin Texas
In Texas, personal property that is exempt from being “touched” in Chapter 7 bankruptcy can’t exceed a certain cash equivalent i.e., $50,000 for single adults and $100,000 for individuals with families. For instance, if you have personal property worth $150,000 and you have a family, $50,000 will be non-exempt (meaning it will be taken). Single persons worth $150,000 will only be entitled to keep $50,000 worth of their personal property.
In case you are wondering what the $50,000 and $100,000 limits for single individuals and those with family entails, here’s what you should know.
Home furnishings, food, clothing, farming vehicles, tools of trade, equipment, books, commercial vehicles, and boats are exempt. These exemptions are discussed under TexaAdd News Property Code: 42.002 on personal property.
Personal property also includes jewelry but is limited to cash equivalent of $12,500 worth of jewelry for a single person and $25,000 for an entire family. You can also keep two firearms, athletic/sporting equipment (including bicycles), and pets.
However, there are limits on the no. Of pets you get to keep. For instance, you can’t keep more than 120 fowl, 12 heads of cattle, 60 heads of any other livestock. For the exact limits, you should consult a Texas bankruptcy attorney.
It’s worth acknowledging that you can retain other cash-related items without them being limited to the $50,000/$100,000 rule. For instance, health aids like wheelchairs and hearing aids are exempt, and they aren’t part of the cap rule. Alimony, maintenance, support, burial plots are also exempt and not counted in the $50,000/$100,000. Most tax-exempt pension products and retirement accounts are also safe. The same applies to insurance benefits (including life insurance) and fraternal benefit society proceeds).
Your college savings plan, crime victim award, medical assistance, special partnership property, foster care benefits, welfare, and survivor benefits (for officers killed while on duty) are also safe in Texas.
There’s more to exempt and non-exempt property (cash and cash-equivalent) in a Chapter 7 bankruptcy petition than what is discussed above.
Considering people may want to turn some of their cash into other forms of assets, understanding the property code in relation to personal property is very important.
An experienced Austin bankruptcy lawyer will help you understand how to prepare for bankruptcy to ensure you keep the most cash and assets without breaking the law.
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