Q: I qualify for Chapter 7. After I file will my stimulus money be an estate asset that bankruptcy trustee can take?
A:
Under the Stimulus Package, in Section 1113(b), Congress has decided that these Stimulus payments to the American people should not count against them, when it comes to bankruptcy. As such, in the Stimulus Package, Congress is amending the Bankruptcy Code as follows: “[e]xclusion from Current Monthly Income.—Section 101(10A)(B)(ii) of title 11, United States Code, is amended as follows: (V) Payments made under Federal law relating to the national emergency declared by the President under the National Emergencies Act (50 U.S.C. 1601 et seq.) with respect to the corona virus disease 2019 (COVID–19).’’
This means that if you believe that you are eligible for a Chapter 7 Bankruptcy, but were concerned that the Stimulus Payment would cause you to be over the Chapter 7 Median Income, do not fear. This amendment to the Bankruptcy Code will exempt those funds.
A: While Trustees have been strongly encouraged to leave it alone, there is nothing that prevents the trustee from taking the stimulus money from you if you still have it at the time the case is filed. You should spend the money on living expenses or paying your attorney's fees and keep receipts.
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