No, he cannot!
I filed bankruptcy for a client who had just been approved for unemployment, and she had received a check for about $3,200. Unfortunately, she received and deposited this check one day before filing bankruptcy.
Normally, when we file bankruptcy, we try to keep your combined bank balances below about $300. The bankruptcy trustee can take whatever money you have on hand on the date of filing and use it to pay your creditors. So here we are, ready to file, with a nice, tempting wad of cash ($3,200) sitting in the bank account.
Thankfully, this is not the kind of money that a trustee can take. Unemployment compensation, both state and the federal pandemic unemployment) are protected from creditors, and from the bankruptcy trustee.
We filed the case, exempted the money in the bank account, and client was very happy.
(4) Except as provided for in Subsection (5):
(a) any assignment, pledge, or encumbrance of any right to benefits that are or may become due or payable under this chapter is void;
(b) rights to benefits are exempt from levy, execution, attachment, or any other remedy provided for the collection of debt;
(a) An individual is entitled to exemption of the following property:
(i) a burial plot for the individual and the individual’s family;
(ii) health aids reasonably necessary to enable the individual or a dependent to work or sustain health;
(iii) benefits that the individual or the individual’s dependent have received or are entitled to receive from any source because of:
(B) illness; or