Will I lose my future stimulus payment if I file for bankruptcy?

The short answer is “no.”  Thus far, under the recent Consolidated Appropriation Act and the Cares Act passed by Congress and signed into law by the President, anticipated stimulus payment has been specifically excluded as “income” and are not considered money available to pay creditors (if not yet received) for bankruptcy cases filed between December 27, 2020 and December 27, 2021.  The character of the stimulus payment (considered cash once received) arguably changes once received.  While I would not anticipate this would change with any new stimulus package passed into law in the next several months, it is hard to make an accurate prediction regarding the breadth of protection any future law will provide.

Additional important questions regarding the receipt of stimulus payments and the potential filing of a bankruptcy case may include “what can I do with my stimulus payment and will how I spend my stimulus effect my ability to file bankruptcy?”  The answer to these questions may require some in-depth discussion.  Generally, If you receive your stimulus before filing bankruptcy your stimulus payment may be used to pay for necessities such as housing, food or utilities or for a service, including legal services.

If you spend the stimulus funds before your bankruptcy case is filed this will normally not present any issues, depending on what you spent the funds on. We recommend that you get advice from an experienced bankruptcy attorney on how you can spend your stimulus money without impacting your potential options in bankruptcy.  If the funds remain on deposit in the bank or in your cookie jar, in other words as available cash, then the character of the stimulus funds has likely changed and would be potentially difficult to protect. 

If you have additional questions, or want to talk further about your present circumstances,  now may be the time to develop a strategy for the best and most permissible use of the stimulus funds you will receive, as part of an overall strategy to manage and eliminate your debt.

At Kinkade & Associates we invite you to schedule a free strategy session to discuss your options for debt relief and learn what you can do with your stimulus payments to assist you in your goal of managing and eliminating your debt.