I believe it is chapter 13 -- the implication that one may keep their primary assets (house, etc) if they agree to make payments on them, but have previous debts nullified.

The lawyer is currently filing.

Meanwhile through the sale of some rare pieces of art, an auction house has paid us $40,000 in cash, which we desperately need to have in reserve to pay the mortgage for the next year and purchase a small vehicle with a warranty (under 10,000).

We have received this in a cashier's check. But we're naturally scared to deposit it.

Needless to say, the debts outstanding exceed 40K, in fact they're closer to 100K+

So the question follows: How will cashing/depositing etc this large amount of money affect our bankruptcy status before we've actually completed all motions to go bankrupt?

Thanks in advance for any help.

EDIT: Thank you for the speedy reply. We are visiting with the attorney tomorrow. I guess the follow-up question is how discoverable would the money be if it were never deposited, but merely cashed? The money reserve is absolutely necessary for a vehicle purchase for the family (city has poor mass transit, we are three people and currently have zero vehicles) and also for a reserve to pay a large mortgage. I would like to follow all and only legal means necessary to avert any crises. (Without bankruptcy, the house goes away. 40,000 is owed on the house alone.)

You must have known this money was forthcoming if you had articles up for sale. I believe you should have mentioned this fact to your attorney. I can see why you are afraid to deposit it. Anyone who is claiming chapter l3, certainly wouldn't have 40,000$ in the bank because that could be used to pay down debt and certainly go a small way into satisfying creditors. You are between a rock and a hard spot. From what I have read, any monies received through whatever reason, an insurance claim, etc. while filing bankruptcy, in bankruptcy, must be turned over to the courts. I would suggest you consult your attorney.

First I doubt with that much in cash, you will not be able to file, depends on many factors but the money will put you over the allowed amoutn, there is only an amount of exempt cash allowed, so you will have to use it to proper pay your debts. Which is what legally and morally you should do.

Also you can keep your secured property in a chapter 7 also, and the rules on chapter 13 changed greatly this year. But no, you will be expected to pay a lot of your non secured debts with this money.
And if you hide the money, and the court finds out, they will stop the bankrupty, not allow it, and not allow you to refile for a number of years.

I don't know if this is applicable so I'll keep it short. When I worked for a State highway dept. a contractor defaulted on one of his contracts and the sate was going through that process. The state made a mistake and sent him $ 400,000. He grabbed the money and spent it while he was in default. Even though it was the state's error, he went to prison for 2 years. Read the provisions of the bankruptcy documents very carefully.

Hello S:

What you are contemplating is a felony. You are attempting to perpetrate a fraud on the Bankruptcy court of the United States. They frown on that kind of activity. If they catch you, and I think they will, you'll do slam time.

What?? You don't think one of your creditors won't find out and snitch on you?? If you owed ME a bunch of money, and you declared bankruptcy on MY debt, you betcha I'll be checking up on you pretty close. I'm certain I could discover your recent pile of money.

excon