Please ensure Javascript is enabled for purposes of website accessibility

Wage exemption doesn’t apply to ‘rainy-day fund’

Virginia Lawyers Weekly//November 20, 2023

Wage exemption doesn’t apply to ‘rainy-day fund’

Virginia Lawyers Weekly//November 20, 2023//

Listen to this article

Where a woman had each paycheck deposited into a bank account, and then transferred $100 to another “rainy day fund” account, the wage exemption did not apply to the rainy-day fund.


Janice Lee Baet Ruano filed for Chapter 7 bankruptcy on Aug. 31, 2022. Prior to filing for bankruptcy, she often engaged in the practice of having her paycheck deposited into a USAA Federal Savings Bank account and then transferring $100 dollars a month from her paycheck into a Barclays savings account to create a “rainy day fund” for herself.

Appellant listed the Barclays account, with a balance of $5,317.52, on her bankruptcy schedules. Appellant claimed that an exemption applied to the Barclays account in the amount of $3,750.00 as wages pursuant to Va. Code § 34-29.

The trustee objected to appellant’s claimed exemption of $3,750, arguing that the case law is clear that once wages undergo a subsequent transfer, they are no longer exempt. The bankruptcy court found for the trustee and held that the wage exemption was invalid as to the Barclays account because it represented a subsequent transfer. This appeal followed.


Appellant contends that the trustee did not meet her burden of proof because she did not present any evidence at the hearing to support her objection. The trustee argues that, because the facts were undisputed, she was not required to introduce evidence at the hearing, and that even still, the bank statements at issue were made part of the record in advance of the hearing and appellant did not challenge them.

The court finds that the trustee met her burden of proof and that the bankruptcy court did not err in upholding the trustee’s objection to appellant’s claimed exemption. In advance of the hearing on the trustee’s objection, the trustee filed bank statements from both the USAA account and the Barclays account as two exhibits.

At the hearing, the trustee referenced the exhibits as she described the facts, and appellant affirmed the facts that the exhibits purported to support. Both parties stipulated to the only salient facts applicable to the objection: that appellant transferred $100 from her paycheck each month from her USAA account into her Barclays account. Appellant never challenged any of the underlying facts offered during the trustee’s argument.

Appellant now argues, for the first time, that because the exhibits filed with the bankruptcy court prior to the hearing were not admitted into evidence at the hearing, they cannot support that judge’s finding. However, appellant cites no case law stating that a bankruptcy judge cannot rely on the representations of the parties when the facts are undisputed.

Nor does appellant cite to any cases that stand for the proposition that a party must present live testimony or formally admit documentary evidence where the facts are undisputed. Further, other district courts have held in a variety of contexts that where facts are undisputed, it is unnecessary to provide live testimony or other documentary evidence, particularly where doing so would be redundant.


At the hearing before the bankruptcy court, appellant cited to a workers’ compensation case where a subsequent transfer retained its exempt status. However, since the workers’ compensation cases are controlled by a different statutory scheme, they are inapposite. The applicable caselaw from within this district supports the bankruptcy court’s holding.


Ruano v. Meiburger, Case No. 1:22-cv-1439, Nov. 2, 2023. EDVA at Alexandria (Alston). VLW 023-3-704. 9 pp.

VLW 023-3-704

Virginia Lawyers Weekly

Verdicts & Settlements

See All Verdicts & Settlements

Opinion Digests

See All Digests