Exemptions In Bankruptcy

20 Dec Will They Take My Annuity if I File for Bankruptcy?

A 32-year-old single mother of two filed for chapter 7 bankruptcy in Kansas and lost her $900 monthly lifetime annuity payment. This week she lost her attempt to protect the annuity from her creditors and the bankruptcy trustee. The chapter 7 bankruptcy trustee likely will sell the future stream of annuity payments for a lump sum of money to pay $68,000 in creditors and his commission and attorneys fees for fighting the issue. Elisha Ortiz received the annuity to settle a wrongful death lawsuit after her mother was killed in a car accident when she was five years old. She received lump sum payments at ages 18, 19, 20, 21 and 25 and was to receive $900 monthly for life. She filed bankruptcy in Kansas City, Kansas in April 2009. She declared the annuity exempt under Kansas law. The trustee objected to the exemption. Ortiz lost her exemption claim because Kansas has no exemption for personal injury settlements. She would have won her exemption in at least 13 states, which allow the exemption under 11 U.S.C. 522(d)(11)(B).

Property that is exempt is removed from the bankruptcy estate and is not available to pay the claims of creditors. The debtor selects the property to be exempted from the statutory lists of exemptions available under the law of his state. The debtor gets to keep exempt property for use in making a fresh start after bankruptcy.

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18 Dec What Do Chapter 7 Trustees Dream About? CASH!

iStock_000003896159XSmall Chapter 7 trustees are paid the small sum of $60 for administering each case. The real money a trustee makes is from finding and selling assets, and no asset is more favored than cash. According to the statutory formula, in addition to the paltry fee of $60 per case, Chapter 7 trustees are paid a commission from distributions to creditors of liquidated assets recovered in cases: 25% of the first $5,000; 10% of the next $45,000; 5% of the next $950,000; and 3% of the balance. Trustees love cash because cash is, by its very definition, already liquidated. There's no realtor needed, no insurance to purchase, no storage to worry about, and no fees to be paid to sell cash. It's already cash, and cash is king. Why does this matter to you? If you're filing bankruptcy, you get to claim exemptions in property of various types. Exemptions allow you to keep certain property. For example,
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23 Nov Missouri Unemployment Benefits Protected After Receipt

Unemployment benefits are protected from creditors and bankruptcy trustees in virtually all states. In 2009, the Missouri state courts emphasized a little-known protection of those assets, even after receipt. In some cases, a payment to a debtor is protected more broadly prior to payment than after. For example, Missouri protects at least 75% of a person's wages from garnishment by a creditor -- at the source, the employer's payroll office. But once the money is received by the debtor, the protection is much more limited, sometimes to only $600 in total cash or cash equivalents. In the case of unemployment benefits, the right to those benefits are fully protected prior to payment. But in Capital One Bank v. Edison Credit Union the Court of Appeals for the Western District pointed out that this exemption also applies to the proceeds of unemployment benefits so long as they are in a segregated account used just for unemployment.
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