Cash, Checking, and Savings Accounts in Bankruptcy

How does the rule on cash and bank accounts actually work?

Filing a bankruptcy case creates an estate. Under 11 U.S.C. § 541(a)(1), that estate is comprised of all legal or equitable interests of the debtor in property as of the commencement of the case. Money is property. So the cash in your wallet, your checking balance, your savings balance, and any credit-union share account all enter the estate the moment the petition is filed.

Entering the estate is not the same as losing it. Under 11 U.S.C. § 522, an individual debtor may exempt property from the estate. Court guidance is blunt about the mechanics: exemptions are not automatic, and to exempt property you must list it on Schedule C: The Property You Claim as Exempt (Official Form 106C). If you do not list it, the trustee may sell it and pay the proceeds to your creditors, according to the pro se instructions published by Bankr. S.D. Iowa.

So the practical question is never "is my money in the estate." It is: how much of it does a claimed exemption cover.

• Estate first: everything you have an interest in on the filing date comes in (§ 541(a)(1)).
• Exemption second: you claim what the law lets you keep, in writing, on Schedule C.
• Whatever is not covered is what a Chapter 7 trustee may look at.

What changes the answer for one person versus another?

Several things move this outcome, and none of them is your intention or how sympathetic your situation is.

The first is your state. Under 11 U.S.C. § 522(b), you may exempt either the federal list in subsection (d) or the property exempt under state or local law — but paragraph (2) applies only unless the applicable State law specifically does not so authorize. Some states have opted out. Alabama, for example, allows only Alabama and non-§ 522(d) federal exemptions (Ala. Code § 6-10-11), and Colorado denies § 522(d) to its residents outright (Colo. Rev. Stat. § 13-54-107).

The second is which state's law even applies. Section 522(b)(3)(A) points to the law of the place where your domicile has been located for the 730 days before filing, with a fallback rule if you moved during that period.

The third is the date. Section 522(a)(2) defines "value" as fair market value as of the date of the filing of the petition.

What does federal law say about money in the estate?

Three provisions do most of the work here.

11 U.S.C. § 541(a)(1) brings in all legal or equitable interests of the debtor in property as of the commencement of the case, wherever located and by whomever held. The phrase "by whomever held" is why money sitting at your bank rather than in your pocket is treated the same way.

11 U.S.C. § 522(b)(1) then allows an individual debtor, notwithstanding section 541, to exempt listed property from the estate. Subsection (d)(5) is the provision commonly called the wildcard: the debtor's aggregate interest in any property, plus any unused amount of the homestead exemption under paragraph (1). Because cash has no category of its own in the federal list, § 522(d)(5) is the provision most often discussed for it — where the federal list is available at all.

11 U.S.C. § 542(b) addresses the other side: an entity owing a debt that is property of the estate and is matured, payable on demand, or payable on order shall pay it to the trustee, subject to setoff under section 553.

• § 541(a)(1) — the estate includes your interests in property, wherever located and by whomever held.
• § 522(d)(5) — the aggregate-interest-in-any-property exemption, plus any unused homestead amount.
• § 542(b) — a matured, on-demand debt owed to you is payable to the trustee, subject to setoff.

Will the bank freeze my account when I file?

This is the fear people ask about most, and the honest answer is that the Bankruptcy Code does not describe a routine freeze of a consumer account — it describes turnover.

What § 542(b) says is that an entity that owes a debt that is property of the estate, and that debt is matured, payable on demand, or payable on order, shall pay that debt to or on the order of the trustee, except to the extent it may be offset under section 553. A deposit account is, in legal terms, a debt the bank owes you and that is payable on demand. Section 542(a) contains a parallel rule for property the trustee may use, sell, or lease, or that the debtor may exempt, unless the property is of inconsequential value or benefit to the estate.

Section 542(c) also protects a bank with neither actual notice nor actual knowledge of the case that pays in good faith. How a particular institution reacts in practice varies, and we do not publish a verified figure or timeline for that. Ask a lawyer about your bank.

• § 542(b) frames a deposit account as a debt payable to the trustee, not as a frozen asset.
• § 542(a) carries an exception for property of inconsequential value or benefit to the estate.
• § 542(c) shields a transfer made in good faith by an entity with no notice or knowledge of the case.

Where do state and local rules change this?

The exemption side of this question is where state law dominates, and the variation is real.

Some states deny the federal list. Alabama limits estate exemptions to property exempt under Alabama law and under federal laws other than § 522(d) (Ala. Code § 6-10-11). Colorado's statute denies § 522(d) to residents and limits them to exemptions expressly provided by Colorado statute (Colo. Rev. Stat. § 13-54-107). Alaska narrows the field differently, providing that in a proceeding under title 11 only certain listed Alaska exemptions apply (Alaska Stat. § 09.38.055).

Other states keep a choice. California allows an election between two systems, with the § 703.140(b) list available in lieu of the other chapter exemptions (Cal. Civ. Proc. Code § 703.140). Alaska's own court publishes a side-by-side federal-versus-state table for Schedule C.

We do not restate exemption dollar amounts here — they are state-specific and change on published cycles. Your state hub is the place for those figures.

• Opt-out states: § 522(d) is unavailable and only state-law exemptions apply.
• Choice states: you elect one system or the other, never a mix of both.
• Joint filers cannot split — § 522(b)(1) bars one spouse electing (2) and the other (3).

What does this look like in practice on the forms?

Bankruptcy is a disclosure process, and money is disclosed in specific numbered places.

Schedule A/B: Property (Official Form 106A/B) asks at line 16 for Cash — described in the form itself as money you have in your wallet, in your home, in a safe deposit box, and on hand when you file your petition. Line 17 asks for Deposits of money: checking, savings, or other financial accounts, certificates of deposit, and shares in credit unions, brokerage houses, and other similar institutions. The instruction is explicit that if you have multiple accounts with the same institution, you list each one.

Line 18 covers bonds, mutual funds, publicly traded stocks and money market accounts. Line 20 covers negotiable instruments, which the form defines to include personal checks, cashiers' checks, promissory notes and money orders. Line 22 covers security deposits and prepayments, including prepaid rent and utility deposits.

You then carry what you want to protect onto Schedule C. Concealing assets or making a false oath can be punished by fine, imprisonment, or both.

What documents and information are involved?

Gathering these before you talk to anyone will make the conversation far shorter.

You will need the balance of every deposit account as of your intended filing date — each account listed separately, even where several sit at one institution, as line 17 of Official Form 106A/B directs. You will need the cash on hand figure for line 16. You will need to be able to identify anything that is technically money but sits somewhere unusual: a money order, a cashiers' check, a utility deposit, prepaid rent.

You will also need the totals from Schedule A/B carried onto the Summary of Your Assets and Liabilities (Official Form 106Sum), plus Schedule I income and Schedule J expenses.

The filing fees themselves are published and fixed. A Chapter 7 case carries a $245 filing fee (28 U.S.C. § 1930(a)(1)(A), (f)(1)), a $78 administrative fee, and a $15 trustee surcharge. A Chapter 13 case carries a $235 filing fee (28 U.S.C. § 1930(a)(1)(B)) plus a $78 administrative fee.

• Per-account balances as of the petition date, listed institution by institution.
• Cash on hand, including money in a safe deposit box.
• Negotiable instruments you are holding: checks, money orders, cashiers' checks.
• Security deposits and prepaid rent, which are money even though you cannot spend them.

What should you ask a lawyer about your accounts?

You are not expected to work the exemption analysis out alone, and the district courts say so directly: the clerk's office cannot give legal advice, and court pamphlets are not a substitute for advice from a qualified attorney (U.S. Bankr. Ct. D. Ariz., Choosing Your Chapter). The Middle District of Alabama's pro se guide similarly recommends consulting an attorney with further questions.

Bring these questions:

Which exemption system applies to me, given where I have lived for the last 730 days under § 522(b)(3)(A)? If my state has opted out, what does its own list cover for cash and deposits? Is any of my balance traceable to a source with its own protection, such as benefits? What is the effect of my filing date on the balance that gets measured? Does my bank have a setoff right under § 553 that § 542(b) preserves? And if I am filing jointly, how does the § 522(b)(1) bar on split elections affect us?

A lawyer can answer these against your actual numbers. This page cannot.

• Which exemption set applies to me, and why?
• How is my filing date going to be chosen, and what balance will it capture?
• Does the source of the money in my account change how it is treated?
• If I am filing with a spouse, what does the single-election rule mean for us?

Frequently asked questions

How much cash can I keep when I file bankruptcy?

There is no single national figure. Cash enters the estate under 11 U.S.C. § 541(a)(1), and how much is protected depends on the exemption you claim under 11 U.S.C. § 522 — which may be the federal list or your state's list, depending on whether your state has opted out. Your state hub carries the published amounts.

Is there a specific bank account exemption in federal law?

The federal list in 11 U.S.C. § 522(d) has no line item labeled for bank accounts. The provision most often discussed for cash is § 522(d)(5), covering the debtor's aggregate interest in any property plus any unused amount of the homestead exemption under paragraph (1). Whether § 522(d) is available to you at all depends on your state.

Does the money I spend before filing still count?

The estate is measured at the commencement of the case under 11 U.S.C. § 541(a)(1), and value is fair market value as of the date of the filing of the petition under § 522(a)(2). What you held earlier is not the measure. How pre-filing spending is viewed is a question for a lawyer — the Code treats concealment and false statements very seriously.

Can the trustee make my bank hand over my money?

Section 542(b) provides that an entity owing a debt that is property of the estate and that is matured, payable on demand, or payable on order shall pay it to the trustee, except to the extent it may be offset under section 553. Section 542(a) has an exception for property of inconsequential value or benefit to the estate.

Do I have to list every account separately?

Yes. Line 17 of Schedule A/B: Property (Official Form 106A/B) asks for deposits of money and instructs that if you have multiple accounts with the same institution, you list each. Line 16 separately asks for cash on hand. Both feed the Summary of Your Assets and Liabilities (Official Form 106Sum).

What happens if I forget to claim my account as exempt?

Court guidance is direct: exemptions are not automatic. To exempt property you must list it on Schedule C: The Property You Claim as Exempt (Official Form 106C), and if you do not list it, the trustee may sell it and pay the proceeds to your creditors. That is one of the strongest arguments for having a lawyer review the schedules before filing.

Does a savings account get treated differently from checking?

The Code does not distinguish them. Both are legal or equitable interests in property under 11 U.S.C. § 541(a)(1), and Official Form 106A/B line 17 lists checking accounts, savings accounts, certificates of deposit and credit-union shares in the same place. What differs is the exemption you can claim, not the category of account.

What does it cost to file?

A Chapter 7 case carries a $245 filing fee under 28 U.S.C. § 1930(a)(1)(A), (f)(1), a $78 administrative fee, and a $15 trustee surcharge. A Chapter 13 case carries a $235 filing fee under 28 U.S.C. § 1930(a)(1)(B) plus a $78 administrative fee. Some fee relief is conditional and governed by statute and Judiciary procedures.

Sources

• 11 U.S.C. § 541 — Property of the estate · official source
• 11 U.S.C. § 522 — Exemptions · official source
• 11 U.S.C. § 542 — Turnover of property to the estate · official source
• Ala. Code § 6-10-11 — Exemptions in Federal Bankruptcy
• Colo. Rev. Stat. § 13-54-107 — Exemptions in bankruptcy
• Alaska Stat. § 09.38.055 — Bankruptcy proceedings
• Cal. Civ. Proc. Code § 703.140
• Bankr. S.D. Iowa official guidance — Instructions - Bankruptcy Forms for Individuals
• Bankr. M.D. La. filing packet — Ch13_Vol_Petition_ Package-2026.pdf
• Bankr. N.D. Ill. official guidance — Chapter 7 - Additional Documents
• Bankr. N.D. Ill. official guidance — Chapter 13 - Additional Documents
• Bankr. E.D. La. official guidance — Chapter 13 Form Packet
• U.S. Bankr. Ct. D. Alaska, Exemptions (Schedule C) for Alaska Bankruptcy Cases
• U.S. Bankr. Ct. D. Ariz., Choosing Your Chapter: What can Bankruptcy do for you? What will it do to you?
• U.S. Bankr. Ct. M.D. Ala., Consumer Pro Se Debtors Guide
• 28 U.S.C. § 1930(a)(1)(A), (f)(1)
• 28 U.S.C. § 1930(a)(1)(B)
• Bankruptcy Court Miscellaneous Fee Schedule, Item 8
• Bankruptcy Court Miscellaneous Fee Schedule, Item 9

Related

• Exemptions: what they protect
• Chapter 7
• Chapter 13
• The automatic stay
• Build your personalised roadmap
• Find your local bankruptcy court