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WHAT HAPPENS TO ANY MONEY I RECEIVE(PREVIOUSLY OWED) AFTER I FILE CHAPTER 7?

Canoga Park, CA |
Filed under: Chapter 7 bankruptcy

I am hoping to get back a few thousand dollars I am owed by a lawyer for an unused retainer from last year. I have to file Chapter 7 in the next few months, but anticipate receiving the money after the filing. Is this affected in any way by my filing, is this money mine free and clear if it is gotten after? Do I have to put it on my forms as possible extra income for the trustee? Same question for any other money received after the filing itself.

Thank You
Julie Landsman

Attorney Answers 7

Posted

I don't think this would be income but it is an asset that you own pre-petition and would need to be listed on schedule B and exempted in order for it to remain yours. Unless you are familiar with California's exemption scheme (even if you are , filing pro se is generally a bad idea), I strongly recommend you retain an attorney to assist you with filing any chapter in bankruptcy.

DISCLAIMER: This message is intended as a general discussion of legal issues and not as a statement of fact, legal advice or a legal opinion. No attorney-client relationship is created by this message. Do not act or rely upon law-related information in this communication without seeking the advice of an attorney licensed to practice in the relevant area. I am a Federally Designated Debt Relief Agency under the United States Bankruptcy Code. I proudly help people in financial need file bankruptcy cases. IRS CIRCULAR 230 NOTICE: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this communication (or in any attachment) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed in this communication (or in any attachment).

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Posted

You have to disclose in your bankruptcy schedules any and everything in which you have an interest. The retainer isn't "income" it is personal property and should be listed on schedule B. As for "other money received after the filing", it depends on the source of the funds. Regular income from employment received post-petition is not property of the estate in chapter 7. However, if the income was earned before the case was filed (i.e. commissions) it is property of the estate and must be disclosed. Don't be a fool, hire an attorney to represent you in bankruptcy.

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Posted

It's not income but it is an asset and needs to be listed on schedule B. Whether you can keep it or not will depend on whether you have enough exemptions to cover the asset. The answer to that question cannot be made in an vacuum.

As far as future income goes you will want to calculate an estimate of average or projected monthly income at the time case is filed and put that information into Schedule I.

If at all possible, hiring an attorney will save you a lot of stress and headache, and depending on potential issues in your case, maybe some money/assets. The Trustee will not offer you legal advice but will be glad to take non-exempt assets. If there are any issues with your case getting an attorney to step into an existing case with problems can be very difficult.

Good luck with your case.

I am not YOUR lawyer. You should not rely on answers to questions as legal advice. For legal advice you should contact a law firm for a consultation. Tokarska Law Center 185 West F Street #100, San Diego, CA 92101 (619) 285-1992 www.sdbankrupt.com Tokarska Law Center is a Federal Debt Relief Agency representing individuals and businesses in filing for bankrutpcy protection under the U.S. Bankrutpcy Code.

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Posted

Ms. Landsman:

It is NOT income at any time (it is a return of money paid out). So, it should never show up on Schedule I or Form 22. I can't say the same for "otehr money received" after filing. It all depends on WHY you are receiving the money. For example, an inheritance or lottery winning a month after filing a bankruptcy is not wages, but it is a windfall that becomes part of the estate and must be reported.

You are required to list all your personal property assets on Schedule B. A retainer you believe is due you is an asset (call it a deposit). You need to schedule it in amount that reflects the present value of the likely amount you will recover. So, if you expect to recover $2,000 in a month or two, list the value as $2,000.

On Schedule C you need to identify which exemption you will apply to the assets you own. Without knowing your entire financial picture, I cannot tell you which exemption is the right one to use. Since it is not wages or income , you can't use those exemptions (even though at some time in the past it probably was income that you used to pay the retainer). You certainly can use your wildcard exemption (if it hasn't been used elsewhere). There may be other exemptions available, but you should consult with a competent, local bankruptcy attorney regarding those possibilitiies.

I practice bankruptcy a few miles from Canoga Park. If you would like me to assist you with your case or parts of it, please contact me using the email address in the disclaimer below.

Good luck.

If you need further clarity, please email me at MICHAEL@MIRELAND.US Answers to questions are for general information purposes only and do not establish an attorney-client relationship. This is not legal advice, simply information. You SHOULD NOT act on this information without consulting a competent bankruptcy attorney in your area and providing ALL relevant information.

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Posted

it is an asset that must be listed in Schedule B and exempted in Schedule C. This time of year tax refunds are a good example of a similar issue. It is not yet received, but you will receive it. Tax refunds need to be listed in Schedule B and exempted in Schedule C. And yes, hire an attorney. If there are any issues that arise you will thank yourself over and over again.

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Posted

Money owed to you by someone is an asset, pure and simple. You must list it as an asset and, if possible, exempt it.

Exemptions are "protections" for value you have in certain assets such that they are "exempt" from collections. Every state has different exemptions amounts available. Exemption laws are based on the state where you resided for the 2 years prior to filing your bankruptcy case or, if you lived in more than 1 state during that period, in the state where you resided for the greater part of the 180 days prior to that 2 year period.

If you don't have sufficient exemptions to cover the value of this particular asset, then the Trustee can take the non-exempt amount that you ultimately receive, or even sell the rights to receive the funds.

This is no time to be guessing at how to list and exempt things. You need an attorney.

Mark Markus has been practicing exclusively bankruptcy law in California since 1991. He is a Certified Specialist in Bankruptcy Law by the State Bar of California Board of Legal Specialization, AV-Rated by martindale.com, and A+ rated by the Better Business Bureau.

Legal disclaimer: Mark J. Markus practices law in California only. The information is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation. Answering this question does not in any way constitute legal representation.

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Posted

When you file a Chapter 7 case a bankruptcy estate is created. That estate includes everything you own and everything you owe on the date your file. This would include money that is owed to you, rights you have to sue and money you have already earned - even if you have not yet received it. The estate in a Chapter 7 case does not include money you earn after the date you file. For example if you are a real estate agent or insurance agent, commissions which you earned before you file but were not yet paid are property of the bankruptcy estate and the Chapter 7 Trustee may take them. You must list the debt owed to you by your attorney. The Trustee may take over this asset unless you claim it as exempt. Even if you do not claim it as exempt , there is only a samll possiblity the Trustee will take over this claim unless it is a large claim because it would invluce a fair amount of work to collect. It is importante that you consult with your attonrey about your exemptions. That is one of the most important legal issues in a Chapter 7 case.

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