Why do I do with my paychecks before I file bankruptcy?

Either way you will be required to disclose any and all assets you own, all income you earn, etc. The more you disclose, the better. If you have any outstanding obligations with the company you bank with, you may wish to open an account elsewhere (to avoid potential setoffs, etc). And yes, very good idea to consult with an experienced bankruptcy attorney. Best wishes, Steve Doan, Esq

Exemptions limit the amount of money you are allowed to hold, whether it be deposited in a bank account or cash in hand. While it is OK for you to use your paychecks for household goods and ordinary living expenses before filing, any non-exempt cash you hold will go toward repaying your creditors. You cannot game the system, lie, or fail to disclose your assets; you have to be completely honest with your bankruptcy attorney. Bankruptcy fraud is a crime, and trying to play games can jeopardize your ability to receive a discharge. Figuring how what to do with cash or paychecks prior to bankruptcy is fact specific and also a routine part of prebankruptcy planning. There are right ways and wrong ways to do it. You should contact a local bankruptcy for more help.

Another thing to consider is your status with your creditors. If you have already been sued and know that there are judgments against you, money deposited into your bank account could be subject to a creditor's lien. If there are no judgments against you, I see no benefit to holding the money as cash as opposed to depositing it into your account. If you are trying to "hide" the money prior to speaking with an attorney, I strongly advise against that. Ultimately, you will need to consult with an attorney in your area to discuss the cash/income exemptions available to you and any pre-filing asset planning that may be available. Frank P. Pipitone

You should deposit the check as usual. In Oregon wages in your account are 75% exempt up to $7500 of exemption. Cash is only exempt up to a maximum of $400. You may be able to time the fling so that you file after you have paid the rent and other ongoing bills. You should talk to a bankruptcy attorney as soon as possible to find out all your options and to determine the timing of the filing.

It's ok to spend money on normal living expenses. Just make sure you hang on to enough to pay for your bankruptcy. My only concern about putting money into a bank account would be if someone has a judgment and they could garnish the account then they could take your money - so don't put money into a bank account if you have a judgment against you. The other attorney is right that 75% of your wages are exempt - but it is a big hassle to try to get your wages back after you are garnished and you may need to pay for legal help so I would not rely on this exemption and simply put money into a bank account if I knew that there was a chance that the account could be garnished. Again, keep in mind that a garnishment can only happen if there is already a judgment against you. So cash your check, pay your bills with money orders, and see your attorney and figure out if it is safe to continue to use your bank account if you are not sure. You will need to spend down your bank account so that the amount in the account is minimal on the day you file, but up until you file it is OK to use the account - absent a garnishment looming over you.