Posted on: 25 May 2022
If you're thinking about filing for bankruptcy, you may have questions about how the process will affect your cash accounts — i.e., your checking and savings accounts, CDs, etc. Your bankruptcy attorney can help ensure that your money and property are safe during the proceedings, either by placing them in what's called an exempt account or by structuring them so that your creditors won't touch them during the proceedings. Here are five ways a bankruptcy attorney can protect your cash accounts during the bankruptcy process.
1. Convert Bank Account Funds Into Exempt Assets
When filing for bankruptcy, you can turn your non-exempt assets into exempt ones. This can be done by simply transferring those funds to an account that has not been attached to your name. One example of such an account is an Individual Retirement Account (IRA), which can be fully protected in bankruptcy. Your attorney can advise on legal ways to do it.
2. Apply for a State Wildcard Exemption
In some states, you're allowed to protect personal property with an exemption that lets you keep your cash accounts and home up to certain limits. If your state doesn't offer a wildcard exemption for protecting cash accounts, it might be wise to consult with a bankruptcy attorney about ways in which they can help secure these important assets.
3. Apply for a Federal Wildcard Exemption
Your attorney can help choose a federal wildcard exemption if your state allows it. However, this is an all-or-nothing proposition. You can only use one level of exemption per filing. Your bankruptcy attorney will most likely advise you to go for a federal exemption because it is more generous.
4. Plan To Spend the Money on Priorities Before Filing
Your attorney can help you plan to use your cash for things important to you and that you can afford to pay for. You may want to consider using a debt management plan if it will reduce your interest rates, eliminate debts, or prevent future debt.
It is also important to make sure that you will have money to live on throughout the bankruptcy process, and once it is over, you do not need more credit cards or loans before discharging your debt.
5. Advice on Legal Asset Transfer
You can hold millions in your accounts but still file for bankruptcy if you are insolvent. How much cash can you legally transfer to other people or entities before filing for bankruptcy? Your bankruptcy attorney best answers this question.
Bankruptcy can be a very disruptive and turbulent event leaving you in dire financial straits, so you need very sharp legal help. Book an appointment with a bankruptcy attorney to discuss your intended filing for bankruptcy.Share