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What Is The Best Use of Your Stimulus Checks, If You’re Contemplating Bankruptcy?

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What Is The Best Use of Your Stimulus Checks, If You’re Contemplating Bankruptcy?

Video Transcript:

Hello, this is Andrew Sawin coming to you from Sawin and Shea. Want to speak to you a little bit about the government stimulus checks that everybody, or most people, are now expecting. The government is sending out stimulus checks of $1,200 or up to $1,200 per adult, and up to $500 per dependent child. And they’re on their way. I don’t think that anybody has actually received them yet, but they’re coming soon. The United States Trustee’s Office has issued some guidance regarding those checks and how they are going to be affected by bankruptcy.

The first thing to understand is that if you filed a bankruptcy before March 27th, 2020 that your stimulus checks aren’t going to be affected at all. The stimulus checks law that was enacted also had a code section in it that stated that those stimulus checks are not going to be counted as income in the income based test that we have to look at that determines eligibility for chapter seven bankruptcy and determines what kind of repayment you have to make to creditors in chapter 13 bankruptcies. So, those checks are not going to affect that.

What’s yet to be seen is whether or not stimulus checks could be considered assets in chapter seven bankruptcies filed after March 27th. It’s possible that some trustees could consider those funds an asset of what we call your bankruptcy estate and try to use those on behalf of the creditors if you file a chapter seven bankruptcy after March 27th and before you receive and reasonably spend the funds from the stimulus checks.

The United States Trustee’s Office, the people that oversee the trustee program for bankruptcy, have advised that they want trustees to make every effort to not make those an asset, but there is no legal basis that would keep them out of the hands of a trustee. It would be in your best interest to contact a bankruptcy attorney. We’re here to answer your questions about strategies to make the best use of your stimulus checks, if you’re contemplating bankruptcy. So, don’t hesitate to give us a call. We’re here to help. Be safe.

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