Cash and refunds · Beverly Hills
Wages, Tax Refunds and Cash on Filing Day
Your wages, tax refunds and cash on filing day are part of your bankruptcy case, and you keep them only if an exemption covers them. The day you file is a snapshot, so timing can make a real difference. Call (310) 362-9071 before you file so we can plan the date with you.
- Everything you own on filing day is part of the case
- A tax refund you are owed counts, even if not yet received
- System 1 protects $2,325 in a bank account per debtor (since July 1, 2026)
- System 2 relies on the wildcard, up to $38,700 (since April 1, 2025)
At a glance
Filing day is a snapshot
Filing day is a snapshot of everything you own. When you file, a bankruptcy estate is created. It includes your cash, your bank balances, money owed to you and refunds you have a right to, as of that moment.
In Chapter 7, what you earn after you file is yours. Pay for work done before you filed is part of the estate, even if the check arrives later. In Chapter 13, income you earn during the plan is part of the case and funds your plan payments.
That is why the date matters. Filing the day before payday is very different from filing the day after. The balance the bank shows on filing day counts, including money for checks you wrote that have not cleared.
Wages and bank accounts
Paid wages under System 1. California protects a large share of wages you have been paid, with the exact share depending on whether the pay was subject to a wage garnishment. This helps when your paycheck is sitting in your account on filing day.
Bank accounts under System 1. CCP 704.220 protects $2,325 in a deposit account per debtor, effective July 1, 2026. This amount updates each July.
Public benefits. If your benefits are directly deposited, System 1 protects $2,175 for one payee or $3,250 for two or more, and $4,400 or $6,575 for Social Security (effective April 1, 2025). Social Security is also protected under federal law.
Leave credits. System 1 protects $8,625 of vacation, sick and family leave credits (effective April 1, 2025).
Under System 2, cash and bank balances are usually covered by the wildcard exemption. For a renter, that can be up to $38,700. Compare both on our System 1 vs System 2 page.
Tax refunds
A tax refund you are owed is property of your case, even if you have not filed the return yet. It is money the government owes you.
- Last year's refund. If you file bankruptcy before you receive it, the full refund is part of the case.
- This year's refund. The part tied to the months before you filed is usually part of the case. For example, if you file at the end of June, about half of next year's refund may belong to the estate.
- Earned income credit. Whether the earned income tax credit gets special protection in California is a question we review case by case.
Under System 2, the wildcard often covers a refund. Under System 1, a large refund may be exposed. Trustees in Chapter 7 do collect refunds, so we plan for it.
Timing tips
- File after payday spending, not before. If your paycheck lands the day before filing, rent and bills may not have cleared yet. We pick a date that fits your pay cycle.
- Spend a refund on necessities first. Using a refund for rent, food, car repairs or school costs before filing is usually fine. Keep receipts.
- Change your withholding. If you will file later in the year, lowering your withholding can shrink next year's refund.
- Move your account if you owe the bank. If you owe money to the bank that holds your checking, it may freeze or take funds. Open an account at a different bank before filing.
Ask us before you act on any of these. Each one depends on your facts. A bank levy or a garnishment already in place changes the plan too.
Do not empty your accounts to pay family
Do not pay back family or friends right before you file. Payments to relatives within one year before filing can be taken back by the trustee from the person you paid. Larger payments to regular creditors in the 90 days before filing can be taken back too.
- Hiding cash. Moving money to someone else's account is a serious problem and can cost you your discharge.
- Large cash withdrawals. The trustee will ask where the money went.
- Forgetting money owed to you. A deposit, a loan you made or a final paycheck must be listed.
What it costs
- Chapter 7: flat attorney fee from $1,200, plus the $338 court filing fee
- Chapter 13: attorney fee quoted in writing, and part of it can be paid through the plan
- Payment plans are available, and the first consultation is free
More on what you keep
- California bankruptcy exemptions: what you keep
- California Exemptions: System 1 vs System 2
- The California Homestead Exemption and How Yours Is Figured
- The California Motor Vehicle Exemption
- The Wildcard Exemption Under CCP 703.140(b)(5)
- Retirement Accounts, 401(k)s and Pensions in Bankruptcy
- The Tools of the Trade Exemption
- Household Goods, Jewelry and Personal Property
- Wages, Tax Refunds and Cash on Filing Day
Wages, refunds and cash questions
Will I lose my tax refund if I file bankruptcy?
You may lose your tax refund if you file bankruptcy and no exemption covers it. Under System 2, the wildcard often protects it. Timing your filing and how you spend the refund can also help.
How much cash can I have when I file bankruptcy?
How much cash you can have when you file bankruptcy depends on your exemption system. System 1 protects $2,325 per debtor in a bank account (effective July 1, 2026). System 2's wildcard can protect up to $38,700 (effective April 1, 2025).
Do I keep my paycheck after I file?
Yes, in Chapter 7 you keep paychecks for work done after you file. Pay for work done before filing is part of the case but is often protected. In Chapter 13, your income funds the plan.
Can I pay my mom back before I file?
No, you should not pay your mom back before you file. The trustee can recover payments to relatives made within a year before filing. Read our guide to what you keep in bankruptcy for what is protected.
Free consultation
Pick the right day to file
Call (310) 362-9071 or send the form. Bring your last bank statement and tax return and we will plan your filing date with you.
Law Offices of John Asuncion9454 Wilshire Blvd., Penthouse Floor
Beverly Hills, CA 90212
(310) 362-9071
Monday to Friday, 9 a.m. to 6 p.m.