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If I File Bankruptcy Will My Stimulus Check be Taken?

Will You Have to Surrender Your Stimulus Check

The first round of US stimulus checks have been sent out by the government. More may be coming. Many have received them, some have not. The question is; is the bankruptcy court entitled to your stimulus check? Will you have to turn it over if you file before you receive it, or will you have to turn it over if you've already filed and have not received it.

Chapter 13 Trustees in Maricopa County Are Not Claiming Them.

The two Maricopa county chapter 13 bankruptcy trustees have already come out and said that they are considering the checks disaster relief, and are not going to be asserting any claims to them for debtors in active chapter 13 bankruptcy cases. As for other trustees in other counties (like Tucson) we are not 100% sure. The consensus has been that the other trustees will view them in the same light.

Chapter 7 Bankruptcy Trustees Are Unknown

The thought is that the chapter 7 trustees will not claim an interest for the bankruptcy estate in economic stimulus checks for debtors in chapter 7 cases, or debtors who have yet to file. Again, the thought is that these are disaster recovery funds and that creditors are not entitled to them.

Timing of filing a chapter 7 case in Arizona could be a factor in receiving the stimulus monies. The current exemption amount for cash on hand on the date of filing your bankuptcy case is $300.00 for an individual and $600.00 for a couple. Of these proceeds are in the bank account of the debtor oin the filing date, it could be argued that they are property of the bankruptcy estate because they were cash in the account on the filing date. An argument could be made however that the proceeds are exempt even if the cash on hand allowance is exceeded because of the nature of the funds (disaster relief).

For the foregoing, debtors should be aware of when they think they might be getting stimulus funds. If the proceeds are expected, it might be wise to hold of filing until the funds are spent on allowable expenses (rent, food, mortgage, car payment, etc.).

If you have any questions about this please dont' hesitate to contact our office for a free consulation (480-355-1377).