How Much Cash Can I Have and File for Bankruptcy in Arizona?

When you file for bankruptcy in Arizona you are only allowed to have a limited amount of cash on hand on the day that your bankruptcy case is filed.  Before I go any further it is important to understand that the laws I am about describe are only applicable in Arizona.

These laws are known as “exemption” laws and each state has it’s own set as does federal law.

The exemption for cash “on-hand” in Arizona is not more than $300 for individuals and $600 for couples.  If you have more cash on the day you file for bankruptcy the bankruptcy trustee can make you turn it over and the money will be given to your creditors.

It is important to understand that the rule on cash is limited to the exact day that you file your bankruptcy case.  If you get get paid the day after you file for bankruptcy and have more than $300 it is not a big deal.  But if you have more than $300 on the day you file plan on turning it over to your creditors.

Watch Out for Outstanding Checks and Online Bill Pay

Sometimes people will get caught in the “too-much cash trap” because they have outstanding checks or have online bill payments that are pending.  Even if the money is “spoken for” or if it is not available to you because you have a pending online bill payment you need to make sure that money has actually left your account.

If the check is still outstanding or the money is still there just “not available” then for bankruptcy purposes in Arizona you will still lose that money to your creditors.

Don’t Lose Your Money – Plan Ahead for Your Bankruptcy

The easiest way to avoid losing additional money is to plan out your bankruptcy in advance.  I help clients with this. We usually don’t file any bankruptcy cases on Friday because that is the day when most people get paid.  We usually give people at least a couple of weeks’ notice to make sure that all checks have cleared and that there is no money in the bank.

It is not easy to go through bankruptcy and have no cash on hand, but planning things out carefully can help you reduce the amount paid as much as possible.

Photo Credit:  401(k)2012