Can I Keep My Cash in Chapter 7 Bankruptcy?

You can keep cash when you file for Chapter 7 bankruptcy if it's exempt under state or federal law.

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If you have cash on hand when you file for Chapter 7 bankruptcy, you may be able to keep some or all of it. Both federal and state laws provide exemptions that allow debtors to keep a certain amount of cash when they file for Chapter 7 bankruptcy.

Read on to learn how using bankruptcy exemptions may allow you to keep your cash after a Chapter 7 bankruptcy.

Claiming Bankruptcy Exemptions

When you file for Chapter 7 bankruptcy, the bankruptcy trustee in your case has a duty to liquidate your assets and distribute those assets to your unsecured creditors. However, the trustee may not liquidate all of your property—under law, certain property and cash is exempt from liquidation to ensure that you are able to continue living a productive life. These laws are called exemptions.

How Much Cash May Be Exempt?

The type and amount of cash exemptions available to you depend on the laws of your home state.

Although the Bankruptcy Code provides federal exemption laws, many states have elected to adopt their own exemption laws. Alternatively, some states allow you to chose whether you want to use the federal exemptions or the state exemptions. So, to figure out how much cash is exempt, check the exemption laws of your state as well as the federal exemption laws, if they are available to you.

To find out what amount of cash is exempt in your state, what is exempt under the federal exemptions, and which states allow you to use the federal exemptions, see our Bankruptcy Exemptions topic area.

Types of Cash That May Be Exempt

For bankruptcy exemption purposes, cash does not just include the money in your bank account; it may also include any assets that are readily converted to money. Here are some types of cash that may be available for exemption, depending on the laws of your home state:

  • alimony, maintenance, and support
  • bank deposits
  • claims for negligence or tortious conduct
  • crime victims’ compensation
  • fidelity bonds
  • fraternal benefit society benefits
  • insurance benefits
  • pension and retirement benefits
  • public assistance
  • unemployment compensation
  • veterans benefits
  • wages, and
  • workers compensation.

To find the exemption laws in your state, go to our Bankruptcy Information in Your State topic page, and then click on your state.

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