What Happens To Money In A Savings Account If I File For Bankruptcy?

2010-12-07   minute read

Donna Carson


When you file for bankruptcy, you swear a Statement of all the assets that you own. One of these would be your bank account.

Person talking on their cellphone looking over paperwork

There is no specific exemption for cash in a bank account when you file bankruptcy.  However, if this is the money that you need to live on for the next few weeks until your next income, we generally don't realize on this asset.  You could go and buy your groceries, pay the rent, pay the utility bill that you haven't received yet...and the money would be gone. If you have more than that amount in your savings account, then you probably will lose some.  You have more than you need to live on.

As far as savings after you file for bankruptcy, this is called after-acquired property.  This property is yours so long as you comply with all of your duties in the bankruptcy.  For example, you wouldn't be able to save up all this money but not pay your surplus income obligations to the bankruptcy.  After-acquired property is yours unless the Trustee steps in.  And he/she is not going to do that if you are complying with all of your duties.  Saving money after bankruptcy is great budgeting on your part. As far as paying the creditors....it depends on which creditors they are.  If they are unsecured creditors (IE:  they have no security against any of your assets), then no....you can't pay them.  This would be preferential treatment.  If they are secured (such as a car loan) and once the Trustee reviews the equity in your vehicle and releases any interest, then yes... you would keep paying them.  

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