Things to be aware of if facing bankruptcy 7
A temptation that many people have when facing a bankruptcy is hiding assets. Often this arises from the mistaken notion that a debtor cannot get relief from debt unless they give up most of what they own. The bankruptcy code is not intended to be a punitive mechanism to harass people who do not pay their debt; it is intended to be a tool to give people a fresh start when they cannot reasonably cover all their debts. As part of this “fresh start’ intent, the federal bankruptcy exemptions are fairly generous. Some state law exemptions are more generous, but most are far less expansive.
One must first determine if their state law allows a debtor to utilize the federal exemptions. Kentucky does allow a debtor to opt for either the state exemption or federal exemptions. I have only found two cases where the Kentucky state exemptions were more favorable than the federal ones: 1) a case where a joint-bankruptcy was filed but one of the debtors passed away while the bankruptcy was pending, and 2) a case where the debtor was due a substantial worker’s compensation package. In each of those circumstances, the state exemptions were 100% of those assets being exempt where the federal ones were limited to “reasonably necessary”.
In all my other bankruptcies, the federal exemptions were the best choice. And, in nearly all consumer Chapter 7 bankruptcies, the federal exemptions will allow debtors to keep all their property. Since most debtors have enough exemption to keep all their properties, then there is no reason to try to hide those same assets. The attempt to hide assets, creates a real risk that could sabotage the entire bankruptcy and lead to the trustee giving tremendous scrutiny to your whole situation. It can also lead to loss of the relief of a discharge of debt.
1 Comment »
Leave a Reply
-
Recent
- New Deadlines for Filing Tax Returns as Required by Section 1308
- Late Secured Claim Disallowed Under 12/01/2017 Amended Rules
- Increases in Prime Rate of Interest and in EDKY Trustee’s Fee
- Delinquent Property Taxes and the EDKY Chapter 13 Plan
- Chapter 7 and Student Loans
- Bitcoin and Bankruptcy
- The New Chapter 13 Plan in Operation: The Good, The Bad, and The Ugly
- Prime Rate; Bar Dates; & Other New Plan-Related Topics
- Trends and New Developments: Learning from Court Orders
- Summary of Changes to Federal and Local Rules and Forms Eff. Dec. 1, 2017
- Plan Payments by Payroll Deduction
- Claims Based on Time-Barred Debts in Kentucky
-
Links
-
Archives
- January 2019 (1)
- November 2018 (1)
- October 2018 (1)
- May 2018 (1)
- January 2018 (3)
- December 2017 (2)
- November 2017 (1)
- September 2017 (2)
- July 2017 (1)
- June 2017 (1)
- May 2017 (3)
- April 2017 (3)
-
Categories
- Adoption
- Alternate Debt Relief
- attorney fees
- Bankruptcy
- Assets
- Automatic Stay
- Business debt
- Cash Advances
- Chapter 11
- Chapter 13
- Chapter 7
- Conversion
- Credit Counseling & Debtor Education
- Debt solution centers
- Discharge
- Disposable Income / Budget
- Exemptions
- Foreclosure
- Fraud
- Home Loan Modification
- Home loan modifications
- Means test
- Plan payments
- Planning
- Pre-filing planning
- Preference / Preferential payments
- Proof of Claim
- Property (exempt
- reaffirm or surrender)
- Redeem / Redemption
- Security interests
- Student loans
- Tax Debts
- The estate
- Blogroll
- Business & small business
- child custody
- child support
- Civil Procedure
- consumer bankruptcy
- consumer debt
- Debt collection
- dissipation of assets
- Divorce
- Estate Planning
- Family Law
- Financing
- Fraud
- Gratitude
- Guardianship
- Life & Law
- Marital Assets
- Mediation
- Negotaion & conflict resolution
- Parenting
- Paternity
- Politics
- property allocation
- Solo & Small Firm
- Spirituality
- Uncategorized
- Visitation/Time sharing
- Words & Phrases
-
RSS
Entries RSS
Comments RSS
If only all attorneys could educate their clients like this.