Can you file Chapter 13 Bankruptcy if you have $20,000 in a savings account?

Question

If you have money saved and file Chapter 13 Bankruptcy do you get to keep the assets or do they have to be surrendered when you file?

Austin Hirschhorn · Answer

You can file a Chapter 13 bankruptcy petition if you have savings but the savings become part of the bankruptcy estate and unless some portion of the savings is exempt under the state or federal exemptions the savings can be used to pay creditors.  If you are thinking about filing bankruptcy you should consult with an experienced bankruptcy lawyer who can explain the choices available to you.

Asaph Abrams · Answer

You get to keep the assets-there is no liquidation in chapter 13however, your chapter 13 bankruptcy plan must pay unsecured creditors at least the amount that creditors would get paid from estimated proceeds if you were to hypothetically file a chapter 7 bankruptcy IF that hypothetical chapter 7 were a rare "asset" chapter 7 case that entails liquidation.  To the extent the $20K doesn't fall within available exemptions allowances (laws that define what is protected in chapter 7; it's a function of valuing all your assets), then the extent of your savings may effect an increase in your threshold chapter 13 payment. This is the "best interests" of creditors test: creditors can't be worse off by virtue of the debtor's election of chapter 13 instead of chapter 7. Consult with local counsel and Google my name for more information on exemptions.  This answer (by San Diego bankruptcy attorney, Asaph Abrams) doesn't address all facts & implications of the question; it's general info, not legal advice to be relied upon. It creates no attorney-client relationship; it may be pertinent to CA and/or its Southern District Bankruptcy Court only, and it's independent of other answers. It may be time sensitive, as in past the "Use by" date: laws and case law change.  Hire legal counsel before acting or refraining from bankruptcy/legal action.

Diane Drain · Answer

No - don't do that, you will have to pay the value of that money to your creditors.  There are many other ways for you to use that money before bankruptcy.  Please understand that filing for bankruptcy is a very complicated process.  It is wise to talk to an experienced bankruptcy attorney before deciding to take this important step.  Most Arizona bankruptcy attorneys offer a free consultation about the basics of bankruptcy.

Charles Schneider · Answer

You can have $20,000 in the bank account. The question if you can keep it depends on what state you reside in and the exemptions choice permitted by the state.

Kevin Bruning · Answer

A chapter 13 bankruptcy allows you to keep your assets while making monthly payments to a trustee, who will pay off all or a portion of your debts; at the end of the repayment time, which can be anywhere from 3 to 5 years, you can get a discharge of any of the remaining debts. If you have $20,000 in savings, you will probably be required to pay at least that much the trustee over the 3 to 5 year time span. It may be more, depending on what other property you own and whether it is exempt. You should work with a qualified bankruptcy attorney to determine the best option for you.

Gregory Wald · Answer

You shouldn't have to surrender the funds, but the amount of non-exempt property that you own can affect the total amount that you must pay the trustee over the life of the Chapter 13 plan.  An attorney would need detailed information about your finances, including all of your assets, debts, income and living expenses in order to give you advice as to whether having $20,000 in a savings account would have any affect on your chapter 13 case at all.

Harry Roth · Answer

If that is all you have in the world, then yes. That plus a bunch of other stuff may mean that you would lose some of it in your bankruptcy. It also may not mean that, so check with a bankruptcy attorney.

Todd Whiteley · Answer

To answer what assets you are able to keep in chapter 13 bankruptcy, you must consider the following factors:  1) the equity value in your assets; 2) whether the exemption statutes will fully exempt your equity in the asset; 3) which set of exemptions provide the most protection for your total assets, and finally 4) how much your chapter 13 plan will pay to unsecured creditors.  It is good to see a bankruptcy attorney early in order to plan your bankruptcy to get the most benefit.

Burton J. Green · Answer

Chapter 13 allows you to retain your bank account.  However, the  repayment  chapter 13 plan will be required to pay the $20,000.  However,  you spread  the payment over the duration of the plan, which can last 60  months.

Jay Moreland · Answer

The simple answer is yes. Generally you get to keep all of your assets in a Chapter 13 bankruptcy. In order for your Chapter 13 plan to be approved by the court there are two tests that have to be met. You have to pay all of your available income into the plan. That means that you will be placed on a budget and all of your excess income beyond your allowable expenses must be paid on a monthly basis into the plan. You also have to pay into the plan at least as much as you would have had to surrender in a Chapter 7 (liquidation) bankruptcy. Assuming that the savings account was not exempt and that was your only nonexempt asset, you would have to pay at least $20,000 into the plan to satisfy this test. The plan is typically 36 or 60 months depending on your income. So in a 36 month plan the payment would need to be at least $555.55 per month (20,000/36) to satisfy this test. For a 60 month plan the payment would need to be at least $333.33 per month (20,000/60) to satisfy this test.

William Rubendall · Answer

You keep all your assets when filing chapter 13.? However, depending on what you  own, your plan payment must pay creditors as much as they would received in a  liquidation under chapter 7.

Willie Stephen Graves · Answer

You don't have to surrender your assets under Chapter 13, but you'll have to pay at least the value of your non-exempt assets (and cash in the bank is non-exempt) to your creditors, up to 100 cents on the dollar.

Beth Bizousky Carter · Answer

This would depend on the source of the monies in the bank account and if the monies could be exempt or not.  If the monies, or a portion of these monies are not exempt, in a chapter 13 bankruptcy, one would be required to pay the dollar amount of the nonexempt monies to their unsecured creditors over the length of the bankruptcy plan and the monies would not be liquidated.

Roger Bus · Answer

Yes, you can still keep the assets if in the appropriate Chapter 13 to   "cover" the non-exempt equity in any assets that you own.

Steven Alpers · Answer

You have exemptions which may allow you to protect this money.

Shilo Naomi Borja · Answer

You must have something to reorganize through your chapter 13, such as missed mortgage payments or a secured vehicle loan. If so, you can exempt sums of monies held on deposit.

Marc Stern · Answer

That really depends upon what the plan provides, what the exemptions are, and a host of other issues.  In general, some of it is not exempt.  That would need to be paid as part of the plan.

Deborah Stencel · Answer

The answer to your question depends on a number of factors.  If the money is exempt in your case, it probably has not affect on the case.  If the money is not exempt, you would have a choice of turning over the unexempt funds or paying an equivalent amount to your unsecured creditors of the period of the plan.  There may be other options depending on your unique situation.  Talk to a lawyer before taking any action with regard to these funds.

Michael Jay Berger · Answer

You can file Chapter 13 and keep the money. However your payout to creditors through your Chapter 13 plan must be equal to or greater then what your creditors would receive in a Chapter 7.

Joseph Rogers · Answer

You get to keep the assets, however it may effect the amount of your trustee payments.

Diann Moseley · Answer

The asset is not surrendered.

David Farrell · Answer

You can keep the money which may be fully "exempt" depending on the value of your other assets, if any.  One of the rules in Chapter 13 is that unsecured creditors must get under the plan at least as much as they would in a Chapter 7 case.

Giovanni Orantes · Answer

In a 13, the normal rule is yes.  If other exemption laws would protect the rest of your assets, there is one law protecting over $21,000 by itself, which can be cash, which means you keep it without consideration of it for any other issue.  Otherwise, if you have assets with large unexempt values, you may need to distribute some or all of that amount through the life of the plan, but you may keep it in the beginning, if you choose.

Robert De Groot · Answer

Yes. In a chapter 7 the trustee would grab the dough, but in a 13 would not. Consult with an actual bkry atty.

John Brennan · Answer

You must declare your assets and they are to be made available to pay your obligations.  There are exceptions, see an attorney.

Jason Richards · Answer

The property doesn't have to be surrendered, but because bank funds are non-exempt, you will likely need to pay out no less than $20,000 to unsecured creditors over the course of your Chapter 13 plan. You have to do this to comply with the best interest of the creditors test.

Jeremy Shephard · Answer

If you can exempt the asset you would be able to retain it. The issue is that you would not likely have enough exemption to protect all of the savings account. You should speak with an attorney to determine what options you may have.

Timothy Byrne · Answer

You can protect up to $10,000 in personal property. However, it cannot be in a bank account. Contact a competent bankruptcy attorney to discuss this matter.

Stuart Nachbar · Answer

In a Chapter 13, there are ways to save assets, based on the exemptions.  You state that you have 20,000 in an account?  Is it your account alone or joint (meaning w/someone else).  Also do you own real property or a car?  All of these things will impact on how much of that account you can keep.

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Can you file Chapter 13 Bankruptcy if you have $20,000 in a savings account?

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