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Bankruptcy: How to Keep More of Your Money

If you happen to own bitcoin, and you may be filing bankruptcy, this could be one of the most important articles you will read.

The big concern among many filers is can they keep some money at filing, and if so, how much? The fact is, the federal and state governments do have laws that allow someone filing bankruptcy to keep a certain amount of money. 

In this article we will examine exemptions as they relate to bankruptcy. Also, we’re going to explore the impact of bitcoin code on a bankruptcy filing scenario.


First, consider a bit of background information. When you file for Chapter 7 bankruptcy protection, certain property legally goes to the bankruptcy trustee to use toward paying unsecured creditors.

However, you’re allowed, in accordance with bankruptcy laws, to keep property, even cash, through exemptions. Every state is different, so it would be wise to see what your state will allow for exemptions, as they get very specific. Not every property and only a certain amount of money may be exempt. In addition, only certain types of cash items, like wages, may be exempt.

It’s also important to note that timing can make a huge difference in how much of your cash is protected. For example, let’s say you bought something essential on your credit card. If you file for bankruptcy inside of 90 days of that purchase, you will still be liable to pay that balance, rather than have it included in your bankruptcy filing.

Impact of Bitcoin Code

The short of it is that federal law has ruled bitcoin to be property, not currency. How does this impact you if you are filing for bankruptcy?

If you own bitcoin and you file for bankruptcy, the trustee will be looking to liquidate any and all of your assets they can in order to address the unpaid balances for the creditors you list to be covered in bankruptcy protection.

If you have used bitcoin in a major purchase, such as a home, you will be liable for any taxable gains on that purchase. If these go unreported, you could have a major tangle with the IRS, especially if your bitcoin assets are not reported at tax time. Now, factor in your bankruptcy filing. If you purchased many bitcoins, and the value is high, the creditor’s protection might be favored over yours.


We learned that you can keep money and property, even with bankruptcy looming. Check your state’s bankruptcy laws to see what you are allowed when filing. We also learned that if you time your filing wrong, you could actually cost yourself a great deal more money. Finally, we learned that bitcoin can have an impact on your bankruptcy, depending on its value. 

In summary, it is possible to keep more of your money, even if you are faced with bankruptcy. You just need to proceed carefully in how you handle your affairs before, during and after filing.