How much money is it possible to have if I am filing a Chapter 7 bankruptcy?
Question Details: I am an educator and received a lump sum balance of contract check at the end of the school year which we use to get us through the summer until I receive my first check next month. The balance of contract check was equivalent to 4 paychecks ( 2 last month and 2 this month). I am concerned that when I submit paperwork to the trustee in a week before my meeting of the creditors at the end of July that I will be required to use this money to pay creditors and it will not be available for us to use to live on until I get paid next. I can't imagine I am the only one to go through this situation.
The exemption for money in the bank in Arizona is only $150. However, that is not the issue. The issue is whether this money should be exempt under another theory. You are right to be concerned. The trustee no doubt will go after that money. I take it that you do not have a bankruptcy lawyer, and I am wondering whether Chapter 7 is the best idea for you in this situation.
There is one Supreme Court case that supports your cause for letting you keep that money -- Lines v. Frederick, 400 U.S. 18. In that case, the Supreme Court held in favor of a debtor who wanted to exclude accrued vacation pay because it provided the equivalent of wages to him in the future. Difference being the debtor in that case didn't already have the money. The fact that you have this money (or are about to have it) concerns me. Have you considered a reorganization instead of a liquidation? I think you should consult a bankrutcy attorney.
