There’s nothing better than having tons of money in the bank. Who doesn’t want that?

Of course, if you had tons of money in the bank, you probably wouldn’t be reading about bankruptcy.

But what about just a little bit of money in a checking account? Surely you can have at least some money stashed away when you file for bankruptcy. What about emergency situations? If you are eliminating all of your credit cards in bankruptcy, then cash in the bank is all that’s left – just in case.

The bankruptcy rules are strict on this issue. You are only allowed to “exempt” (another way of saying “protect” in bankruptcy language) a small amount of money in a bank account when you file for bankruptcy. The amount varies by state, but typically it’s around a few hundred dollars.

What Happens if I Have too Much Money When I file?

Anything above the exempt amount of dollars in your checking and savings account will be taken by the bankruptcy trustee and distributed to your creditors.

The good news is your bank account balance only needs to be low on the date your case is filed. So you should work carefully with your attorney to determine when your balance will be low. He or she will file on that date and all of your money will be protected.

But What Happens if My Account Is Never Low Enough?

Well, you can’t just take money out of your account and stuff it into your mattress. That is a form of fraud – and you don’t want to commit fraud do you? Besides, your case could get thrown out, and you could be fined or even worse if you get caught. And you will get caught, because the bankruptcy trustee is going to look at your bank statements.

So What do You do With The Extra Money?

You are allowed to take your extra money out and spend it on necessary living expenses before your cases is filed. You could stock up on food, you could pay your rent and utilities, or you could even buy tires for your truck if needed.

Just be sure to do two things.

First, check with your attorney to guarantee you are spending money on something that is allowed.

Second, save receipts for every penny. That way, if the trustee questions what you did with the money, you can prove where it went.