Tip of the Day “Exemption for Bank Accounts”

Tip of the Day “Exemption for Bank Accounts”

Tip of the Day for December 1, 2012:

“Exemption for Bank Accounts”

Your exempt property is the property you can keep if you file for bankruptcy. Exemptions vary from state to state. Different types of property are allowed exemptions in different amounts. For example, the homestead exemption is $17,600 for an individual and $35,200 for a married couple. That means a single person can keep $17,600 worth of equity in his or her home. Other real estate besides your home and tangible personal property (in other words “things”) is subject to an exemption of $9,350. The lowest and stingiest exemption is the exemption for intangible property like cash, stocks, bonds, income tax refunds and bank accounts. The exemption for intangible property is only $350 for an individual and $700 for a married couple. That means you can only have $350 in the bank on the day you file bankruptcy. The tricky part that trips some people who aren’t expecting it is that the bankruptcy courts consider the balance in the bank subject to the exemption to be what the bank says your balance is. That means if you have written a check which hasn’t cleared the bank on the day you file, the bankruptcy trustee will consider that you still had that money even though you had already spent it and you might be charged with check deception if the check bounced. So if you pay your rent of $750 with a check and your landlord doesn’t cash the check right away, the trustee consider your bank balance is $750 higher than what you thought it was. If your records showed you had $350 in the bank on the day you filed, the trustee will want you to pay him or her that $750. It is a good idea to seek advice about filing bankruptcy so that you can avoid traps like this. You can call my office for an appointment at (812) 727-0597 or contact us by email

Justin A. Steele

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The Law Office of Justin A. Steele, LLP

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