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Category: Bankruptcy Law
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Experience:  14 years exp., CH 7 AND 13 Bankruptcy cases, AFL-CIO UNION PLUS, UFT NYSID AND ALL MAJOR UNIONS
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If a debtor filing a chapter 7 BK took out $11,000 from Florida

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If a debtor filing a chapter 7 BK took out $11,000 from Florida Pre Paid College Plan in November 2012. She used $6,000 of the $11,000 for living expenses. Out of the $11,000 taken out she has $5,000 left. Would this be considered income and the $5,000 left would be exempt. She is not using the homestead exemption however she is using Other Property
Any personal property to $1,000 (husband & wife may double)
$4,000 of any personal property in lieu of homestead exemption to protect other property.


Hello I am a licensed attorney here to help you with your question, please review my response and do not hesitate to ask for clarificati on


If the account was originally set up as a savings plan funded by prior income the income when you cash it out (versus just borrowing against it), would be income in the 6 month calculation on Form B22.


That is for the 6000 withdrawl,


however the $5000 if in the savings plan, should be exempt such as an IRA or 401k


, if the contribution was made more than two-years ago, it is not part of the debtor’s estate in the first place. For contributions made more than a year — but less than two years — ago, the first $5,000 contributed is kept out of the estate.


in Florida, monies paid into a validly existing qualified tuition program authorized by 26 U.S.C. § 529, including funds paid into a 529 Plan or Florida Prepaid College Plan for a child, stepchild, grandchild or step-grandchild beneficiary, are exempt from creditor levy, which means it would be protected in either a Chapter 7 or a Chapter 13 bankruptcy.

Customer: replied 3 years ago.

Thank you. This is Florida Prepaid College Plan. However I'm not questioning the money in the plan however the money she withdrew. She took out $11,000 as she needed money for living expenses. Of the 11k there is 5k left that is in her checking account.

Since she withdrew the entire amount, she would have to claim a property exemption for the $5000, to be safe I would put the $5000 in her savings plan if it was not closed, or wait 6 months after to file.

She can use the property exemptions as well. Debtors in Florida who do not own a home can take advantage of a $4,000 "wild card" exemption for personal property. Married couples can claim $8,000 in a wild card exemption for personal property.

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