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Expert: - 4/26/2008


Question
I signed papers for ch7 Mar 19 and the papers were filed on Mar 21.  On Mar 20 I discovered the US treasury had deposited $27,000.00.  This represented 14 months of back pay for SS disability.  I had applied in 8/2007 and did not expect to be approved.  I had signed up for direct deposit and the monies arrived before the benefit letter.  Now I am faced with whether those funds are exempt now that they are co mingled.   My lawyer thinks  they are exempt  but he seems unsure.  I live in Michigan.
There seems to be a gray area on this.  Hopefully you have good news.  I am very anxious and losing sleep.

Thanks so much

Answer
I think the money will be exempt as a "disability benefit," because it is so easily traceable back to the source.

If depositing the money in a bank account caused a disability benefit to be lost, what would be the point of exempting disability benefits in the first place, since people necessarily deposit their benefits and don't walk around with sacks of cash money!

I can tell you that here in California, there is no bankruptcy trustee who would even dare to make an argument that a disabled person's benefit was lost because it was deposited into an unsegregated bank account!  

Be sure to keep all the paperwork to show this. However, I am not a specialist on the bankruptcy exemptions in your state. If you have doubts about the ability of your lawyer, please consult another local bankruptcy attorney right away, someone who is a bankruptcy specialist. It's too much money to take chances with.

I am sorry about your disability, but glad you are finally getting the benefits you deserve after waiting for so long! Good luck to you.  

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Los Angeles Bankruptcy Lawyer Leon D. Bayer

Expertise

Leon Bayer has successfully represented clients in bankruptcy for over 30 years. He is frequently called upon by the media, the California Bar and other associations to provide insight and help educate attorneys on bankruptcy issues. If you or other readers want to keep up with my blog postings about life in and out of bankruptcy, you can follow my blog at http://www.bankruptcyblogger.org/ and my personal web site at http://www.debt-relief-bankruptcy.com and A Human Guide to Bankruptcy at http://www.thebankruptcyguide.net/ Leon also writes about bankruptcy law for Nolo, see http://www.nolo.com/law-authors/leon-bayer.html and his "Ask Leon" bankruptcy law blog column at http://blog.nolo.com/bankruptcy/

Experience

Leon is a Certified Specialist in Bankruptcy Law by the State Bar of California, and has been a practicing bankruptcy lawyer in Los Angeles, California for 33 years.

Organizations
National Association of Consumer Bankruptcy Lawyers, California Bar Association, Los Angeles County Bar Association.

Publications
Author, ?The Essentials Of Chapter 13,? Daily Journal Report, December 18, 1987.
Contributing Editor, Basic Bankruptcy, California Practice Handbook, Matthew Bender 1992, 1993.
CEB Consultant, CEB-Personal and Small Business Bankruptcy Practice in California, 2003.


Education/Credentials
B.A., J.D.

Awards and Honors
President, 1995-1996-Los Angeles Bankruptcy Forum; Member - Los Angeles County Bar Association Committee on Commercial Law & Bankruptcy, 1988. Law Advisory
Commission-Personal & Small Business Bankruptcy Law of the State Bar of California, 1996-2000

MR. BAYER SAYS: The big banks and credit card companys have been working overtime for many years to undermine the Consitutional right of the American people to be able to claim bankruptcy protection. In 2005 the banking lobby successfully convinced Congress and the President to make the laws and proceedures more complicated, hopeing that it will stymie legitimate people from filing bankruptcy. They succeeded in gaining these complex new legal proceedures by greasing the legislative system with hundreds of millions of dollars in "campaign contributions." The good news for the American people is that while the new laws have made the proceedures needlessly complex to the point where inexperienced people can't help but trip over the maze of new rules and regulations, the process is still doable, especially with a lawyer who is well trained and experienced in this specialty.

Past/Present Clients
I have probably handled something on the order of about 15,000 bankruptcy cases thropughout my career.

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