It’s time to talk about the float.
Not the root beer float, though that would be more fun.
The bank “float”: the period between writing a check and it clearing your bank.
When you file bankruptcy, your schedules are supposed to show what you own on that day. For checking accounts, that’s the balance that the bank shows.
If you’ve written a bunch of checks right before filing, checks still floating out there on their way to the bank, your bank balance is higher than the balance in your checkbook.
Why does the float matter
The money in your bank account on the day you file belongs to your bankruptcy estate.
In the eyes of the law, it’s yours, even though you’ve written directions to the bank to pay some of it out to the holders of your checks. Those directions (your checks) just haven’t arrived at the bank.
A bankruptcy trustee can demand that you pay over to the estate that balance, even though the money has long since been paid out by the bank, who knew nothing of the bankruptcy case when it honored your check.