Can You Keep the Money You Have In the Bank?

You may want to know:  Is there any way to keep the money you have in the bank? Is there any way that cash in the bank can be exempt?

In most cases, there is no specific exemption for money. There are specific exemptions for various other types of property. For example, there is a vehicle exemption up to a certain amount of money ($5,350 under the 703 exemptions as I write this). There are tools of trade exemption ($8,000 under the 703 exemptions as I write this). But there is no specific exemption for money.

When you file a chapter 7 bankruptcy you chose which set of exemptions you will be using: Either the 703 exemptions or the 704 exemptions. The biggest difference between the 703 exemptions and the 704 exemptions is the amount of exemption for your home.

Under the 704 exemptions the home exemption is large ($75,000 if you live alone, $100,000 if you live with a family member or $175,000 if you’re over 65). But under the 704’s you can only use this exemption for a home. If you don’t have equity in a home then this exemption is worthless to you.

Under the 703 exemptions, the home exemptions is smaller ($26,925) but you can use it for any property. If you don’t own a home you can still use the exemption for any kind of property. For this reason, it is referred to as the “Wild Card” exemption.

So back to the original question. Can you keep cash in the bank? The answer is that you can use the $26,925 Wild Card exemption if you’re using the 703 exemptions and you haven’t already used the Wild Card exemption to protect something else.

But what if you’re using the 704 exemptions? In most cases, the trustee will take the cash you have in the bank.

Therefore if you’re using the 704 exemptions you should spend any money you have in the bank before you file bankruptcy.

I say in “most cases” because there are exceptions.

There is a specific exemption for the money you have in the bank which is Social Security benefits. Social security benefits that are deposited into a bank account are exempt under CCP 704.080. See But you had better keep the money in a separate account. If it is mixed up with other money you may have problems using this exemption.

There is another exemption for the money you have received from a retirement plan. Under CCP 704.115 retirement benefits that are deposited into a bank account are exempt but only to the extent, you can show the funds are necessary for your support during retirement.

Under CCP 706.050 75% of the money that was your earnings is exempt. But the other 25% isn’t exempt. This only applies to wages that are unpaid.  Once you receive them they are no longer exempt.

As you can see, sometimes it can be tricky to avoid losing money that you have in the bank when you file chapter 7 bankruptcy. But with the proper legal planning, you should be able to avoid surprises.

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