Maybe. But just claiming it as exempt is not enough.

To keep a chapter 13 trustee from being entitled to the exempt asset, you must also be able to show that the recovery is "reasonably necessary for the maintenance and support of the debtors." If this happens in one of our cases, we have the debtors make a list of things that they need, like car repair, dental work, roof repairs, etc.

If the asset is exempt and if the proposed use of the money is reasonable, we have not had any trouble with our chapter 13 trustees here in the Houston Division of the U.S. Bankruptcy Court for the Southern District of Texas. They generally will let the debtors keep the money and use it for the intended purpose.

J Thomas Black
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Board Certified, Consumer Bankruptcy Law- Texas Board of Legal Specialization