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WALLSTREETESQ
WALLSTREETESQ, Attorney
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

Resolved Question:

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.
Submitted: 1 year ago.
Category: Bankruptcy Law
Expert:  WALLSTREETESQ replied 1 year ago.

WALLSTREETESQ :

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

WALLSTREETESQ :

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.

WALLSTREETESQ :

That is for the 6000 withdrawl,

WALLSTREETESQ :

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

WALLSTREETESQ :

, 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.

WALLSTREETESQ :

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 1 year 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.

Expert:  WALLSTREETESQ replied 1 year ago.
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.

WALLSTREETESQ, Attorney
Category: Bankruptcy Law
Satisfied Customers: 16407
Experience: 14 years exp., CH 7 AND 13 Bankruptcy cases, AFL-CIO UNION PLUS, UFT NYSID AND ALL MAJOR UNIONS
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