One of our most frequent questions from clients concerns bank accounts and how much money a person is allowed on the day a bankruptcy is filed and how to get their bank account low for the purpose of filing bankruptcy.  In the District of Arizona, we are able to exempt:

-One bank account for $150.00, if you are filing individually

-One bank account for $300.00, or two bank accounts for $150.00 each, if you are filing jointly as a married couple

(Or an equivalent amount of cash on hand, so you cannot simply withdraw money from the bank and hold on to the cash.)

A common concern is that this will affect direct deposits of paychecks, or automatic withdrawals that are scheduled.  There is no need to cancel your direct deposit or change your bill pay system because of your bankruptcy filing.  We will plan on filing your bankruptcy in the small window after you have had an opportunity to spend your pay check on necessary expenses, but before you get paid again.

We suggest that our clients stop writing paper checks two weeks prior to the bankruptcy being filed, because waiting on checks to clear from an account can cause unnecessary delays to filing.  Debit card usage, cashier’s checks and money orders are the preferred methods of withdrawal prior to filing.  If cash is withdrawn from an account, the cash must be spent, with receipts or documentation of how the money was spent.

When considering how to spend down bank account funds or cash on hand prior to filing, we give the following rule of thumb: If the purchase can be considered to be a regular cost-of-living expense, it is most likely not going to raise a red flag.  If the purchase would most likely be considered a luxury or a big-ticket item, we recommend that you avoid the purchase and consider a different way to spend the funds.

Here are several examples of acceptable spending prior to filing bankruptcy in Arizona:

-Groceries, household goods & supplies

-Paying utility bills, mortgage payments, car payments as scheduled

-Repairs on vehicles that are necessary, or part of regular “wear and tear” maintenance

-Home improvements that can be documented with “before and after” photos, as well as documentation of all expenses towards the repair

If you have detailed questions regarding filing bankruptcy and your bank account contact an experienced bankruptcy lawyer at Meyer Law.