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cfortunato
cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8023
Experience:  Bankruptcy professor.
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Auto Deposit of Unemployment checks during Chapter 7 Are unemployment

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Auto Deposit of Unemployment checks during Chapter 7
Are unemployment benefits exempt from seizure in chapter 7? Is it OK to have the checks auto deposited while chapter 7 is being processed or is it advisable to get paper checks and cash them instead of depositing them in bank accounts? If the latter, how long would I have to do this...throughout the entire bankruptcy process or just for a certain period?

cfortunato :

Hi - my name is XXXXX XXXXX I'm a Bankruptcy attorney here to assist you.

cfortunato :

Unemployment income cannot be touched by the Bankruptcy trustee for 2 reasons.

cfortunato :

One is that Unemployment income is absolutely exempt (protected) from the Bankruptcy court.

cfortunato :

The second reason is with a few non-relevant exceptions (eg. inheritances), the Bankruptcy court cannot take any money the Bankruptcy filer receives after a Bankruptcy is filed.

cfortunato :

As the Bankruptcy court can only take money the debtor has at the time a Bankruptcy is filed.

cfortunato :

(So even if Unemployment income was not exempt (which it is), the Bankruptcy court still could not take that income.

cfortunato :

)

Customer:

So would it be OK to continue my unemployment auto deposited after I file, but I should withdraw all funds out of my account before I file...even if those funds were from unemployment income?

cfortunato :

1) Yes - it would be okay to continue to have your Unemployment directly deposited.

cfortunato :

2) You do not have to take the money out of the account as the Bankruptcy court cannot take any money from a bank account if that money is from Unemployment.

Customer:

Could the bank take that money if owe them money a credit card?

cfortunato :

Did you already file a Bankruptcy?

Customer:

Sorry...[retyped] Could the bank take that money if I owe them money a credit card I have with them?

cfortunato :

Also, is all the money in that account from Unemployment?

Customer:

I'm expected to file next week.

Customer:

Yes...all from unemployment.

cfortunato :

Once you file a Bankruptcy, the bank cannot touch that money regardless of whether or not all the money is from UI.

cfortunato :

But before you file, you cannot assume the bank knows all the money is from UI.

Customer:

OK..thank you! I'll probably withdraw it anyway...just to be safe LOL.

cfortunato :

It would be a good idea to inform the bank in person and in writing ( so you have proof) that they shhould not touch the account since all the money is from UI.

cfortunato :

You're welcome!

cfortunato :

Under the circumstances, that would be a good idea.

Customer:

Thanks for the information...much appreciated!

cfortunato :

You're welcome!

cfortunato :

And please have a pleasant evening!

cfortunato and other Bankruptcy Law Specialists are ready to help you