Published on:

When filing for bankruptcy, many consider the IRA (Individual Retirement Arrangement) and 401K exemption as the most well-known of the exemptions. This exemption allows individuals who must file bankruptcy the ability to keep their treasured retirement accounts out of their bankruptcy estate and safe from their creditors. In turn, this allows the individual to emerge from bankruptcy with their retirement accounts still 100% intact and en route to a fresh start.

But what happens if the IRA was not originally yours? What if it was inherited? Is it still safe from your creditors in bankruptcy? The answer is yes and no. If you inherited your IRA from your spouse, then it will still have the same protections as if the IRA was originally yours. However, if you inherited the IRA from someone other than your spouse, then it will not qualify for the exemption. Thus, it will be considered part of your bankruptcy estate and subject to the claims of your creditors. Continue reading →

Published on:

Winn-Dixie has been a staple in Jacksonville, Florida for decades! Being based in Jacksonville has even made it a landmark for those traveling down Interstate 10. However, Southeastern Grocers, the parent company of Winn-Dixie, Bi-Lo, Harveys Supermarket and Fresco Y Mas, made the enormously difficult decision to file for Chapter 11 Bankruptcy in hopes of remaining afloat. The decision was announced Thursday, March 15, 2018. Winn-Dixie’s president and chief executive officer, Anthony Hucker has been quoted saying “[t]his course of action enables us to continue writing the story for our company and our iconic, heritage banners in the Southeast.” Southeastern Grocers operates stores in Alabama, Florida, Georgia, Louisiana, Mississippi, North Carolina and South Carolina. This announcement comes right after Amazon’s entry into the grocery business, just a few short months after the online retail giant obtained Whole Foods Market. Continue reading →

Published on:

protect-money-umbrella-150x150One of the best bankruptcy exemptions offered to those filing bankruptcy is the retirement account exemption. As long as your 401K or IRA is ERISA (Employee Retirement Income Security Act of 1974) qualified, then your 401k or IRA will be protected if you file bankruptcy. Amazingly, there are not a lot of limitations to this rule. This is a wonderful law as it is very common for a person’s biggest asset to be their retirement account. Some of the qualified ERISA retirement accounts include 401(k)s, 402(b)s, IRAs (Roth, SEP, and SIMPLE), Keoghs, profit-sharing plans, money purchase plans, and defined-benefit plans. It is important to note that most employer-sponsored retirements plans are ERISA safe in bankruptcy.

401k Loans

Many who file bankruptcy may have also taken out a 401k loan in an effort to avoid having to file bankruptcy. It is important to understand how your 401k loan will be treated in your bankruptcy. First of all, a 401k loan is not considered a regular debt and will not be treated as any other creditor. In other words, a 401k is not dischargeable through bankruptcy and you will still have to repay it after your bankruptcy is completed. Additionally, in a Chapter 7 in which assets are available to be liquidated, your 401k loan would not receive any portion of the liquidated funds as a normal creditor would. In a Chapter 13, your 401k loan would not be part of your chapter 13 plan. However, you most likely will be allowed to still make payments towards the loan through automatic deductions on your paystubs. Continue reading →

Published on:

I remember turning 18 and being so excited to get my first credit card. I was still a senior in high school, so I went to my favorite department store and applied for my very first credit card. To my surprise, I was approved right away! It seemed all too easy. Shouldn’t getting a credit card be a little more difficult to get?

When I got that credit card, I was so excited to purchase a Coach wallet (my first very own big purchase) and vowed to not use the card again until it was paid off. Of course, I fell into the same trap as many other 18-year-olds and did not stop there. I wanted another credit card and went to my second favorite store and filled out another credit card application.

When I arrived at college that fall, I was shocked to see credit card company after credit company with booths set up on campus. They offered ridiculous free items to get students to sign up, and, guess what, it worked! The booths were always busy with students filling out credit card applications. I don’t know what kept me from filling out one of those applications (maybe it was that I already had one or that it had been drilled into me by my family never to purchase what you cannot afford) I never did and am so thankful today I did not. Continue reading →

Published on:

One thing people do not talk about when contemplating whether they should file a Chapter 13 Bankruptcy, is just how difficult being in a Chapter 13 Bankruptcy is going to be and how it is going to affect your day-to-day life. It is not only difficult because it requires a payment plan which will last three to five years, but it is going to be difficult to find extra money for unexpected expenses.

A Chapter 13 Plan requires you to pay all of your disposable income into your plan. What this translates to could be the following:

Based on the median income and median expense numbers for your state, the average household of 4 spends an average of $2,000.00 per month on rent/mortgage payments, food, gas, electricity, and all other necessary monthly expenses. Your monthly gross income is $4,000.00 per month when you file a Chapter 13 Bankruptcy. Luckily, you have a car payment of $400 per month, which you can use as a deduction on your MEANs test. In this scenario, you could potentially be paying well over $1,000 per month to your Trustee. This leaves barely any extra funds for any other expenses other than necessities. Not to mention anything that unexpectedly pops up such as a necessary home repair, or the need for new tires for your car. (It is important to note that your necessary monthly expenses are not based on what your family actually spends. It is based on what the average family of your size spends in your state.)

Another thing that makes being in a Chapter 13 Bankruptcy so difficult is that even funds received through an insurance payout might be subject to your bankruptcy estate. For example, if you get into a car accident and total your vehicle, the proceeds you receive from your insurance company or the party-at-fault’s insurance company might have to be turned over to your Trustee. Another example would be if you file a claim against your homeowner’s insurance policy. Those proceeds would be treated in the same way. Continue reading →

Published on:

Filing bankruptcy with assets can be very stressful. You want to know how filing for bankruptcy will affect those assets before you file so that there are no surprises. One type of asset that you might be concerned about is an investment property. Can you keep it if you file bankruptcy? Possibly, but most likely not without some consequences.

Chapter 7

A Chapter 7 Bankruptcy is a liquidation of your assets. If your investment property has any equity in it all, meaning it’s worth more than what you owe on it, then your Chapter 7 Trustee will most likely want to take possession of the property. The Trustee will sell it, and then distribute the proceeds of the sale to your creditors after first paying off all mortgages and liens.

If your property is upside down, meaning you owe more on it that it is worth, then your Trustee MIGHT not go after it because they would get little if anything from selling it. HOWEVER, since all of your assets are liquidated in a Chapter 7 Bankruptcy, your Trustee can still choose to take possession of the property and short sale it. This applies even if you elected to keep the property and reaffirm the mortgage on your bankruptcy schedules. Continue reading →

Published on:

rsz_underwaterhouse-150x150When Texas and Florida, along with several other states along the eastern seaboard of the United States, were hit by Hurricane Harvey and Hurricane Irma, many mortgage companies offered their borrowers who had been affected by these storms participation in a forbearance program. A forbearance program is where your mortgage company agrees to suspend your mortgage payments for a set period of time. Forbearance programs are usually good for borrowers who are going through a short-term financial situation. The forbearance of mortgage payments is meant to allow the borrower the time they need to get back on their feet and then recommence their regular mortgage payments. The idea behind the forbearance programs after the hurricanes was to allow homeowners time to repair or rebuild their homes that had been damaged by the storms.

Unfortunately, not all forbearance programs have reached their goal. What I have come to learn through the last several months as forbearance programs are coming to an end, is that some of these programs require the borrower to bring their mortgages current at the end of their forbearance period. This means that borrowers must make all missed mortgage payments at one time when their program ends. The issue that many borrowers who have chosen to take advantage of one of these programs is that they were not aware that they would have to make all of the payments at the end of the designated time period. By the time they learned they would be expected to pay their mortgage company all of the payments that were deferred through the forbearance program, it is far too late for them to prepare for such a large payment at one time. This has put many borrowers between a rock and hard place, because they are unable to bring their mortgages current. Continue reading →

Published on:

Assets-3-150x150What is an ESOP?

Employee Stock Ownership Plan, better known as an “ESOP,” is a way for employees to have ownership in the company they work for. They are used by several large successful companies because of the various tax benefits they can offer to the company as well as to the employee. Most commonly, employees obtain ownership of the company’s stocks as an award to help motivate and reward the employee. They are also a great way for employees to plan for retirement.

Because of how an ESOP works as a trust fund, employees generally do not have much control or access to their shares until they reach retirement age, or when their shares vest. Because of this lack of access, most ESOPs are treated just like a 401K, or any other retirement plan that is qualified under ERISA, when they file bankruptcy; therefore, ESOPs are treated as an exempt asset.

How does an ESOP work?

Just like a trust fund or spendthrift trust, all shares are retained in an ESOP trust until retirement age or termination of employment. Basically, when a company decides to set up an ESOP, they create a trust that the company makes yearly contributions to. The company then creates a formula that controls how employees receive stock in the company. Before an employee can have access to their stocks, their stocks must first vest. Continue reading →

Published on:

payday-150x150Having been unemployed for some time, you have accumulated a lot of debt and are now behind on paying those debts. You are considering filing bankruptcy, but happen to have two vehicles that are paid off and want to sell one of them. Can you sell one of those vehicles and then file a Chapter 7 Bankruptcy? The short answer is it depends, and this is why.

Selling one of the vehicles would be considered a pre-bankruptcy transfer of property, and there are several factors that determine whether a person can complete a pre-bankruptcy transfer. Your bankruptcy trustee will look at whether the property in question would have been exempt when you filed your bankruptcy, the price you received for the property, how those proceeds were spent, and the reason for the transfer.

If the property would have been exempt when you filed bankruptcy, then transferring the property prior to filing bankruptcy should not be an issue. However, it could cause a delay in the bankruptcy process as your trustee makes this determination. Your trustee will want to make certain that you received the fair market value of the property and that it was in fact exempt. In Florida, a debtor is allowed $4,000 in personal property and $1,000 in a motor vehicle if they do not claim the homestead exemption. If a debtor claims the homestead exemption, then they are only allowed $1,000 in personal property and $1,000.00 in a motor vehicle. Continue reading →

Published on:

If you wish to file a Chapter 7 Bankruptcy, you will have to first pass something called the MEANS Test. The MEANS Test is the determination of whether or not you are eligible to file a Chapter 7 Bankruptcy based upon your household size and income.

For a Chapter 7, your income must be below the median income level for your household size in your state. In order to figure out what your income is, the court looks at an average of your monthly income for the previous six months prior to filing. In Florida, as of April 1, 2017, the median income numbers are around the following and increase as your household size increases:

Household of 1: $44,576.00

Household of 2: $55,344.00

Household of 3: $60,636.00

If your median income is below these numbers for your household size, you only have to complete the “short-form means test.” This is because it is easy to determine that you qualify for a Chapter 7, because your income is clearly under the median.

If your median income is above these numbers, you will have to complete the second part of the MEANS Test. The second part of the MEANS Test, the “long form,” does a further determination/analysis of whether your income and expenses allow you to qualify for a Chapter 7. Things such as a mortgage or car payment can help you to lower your monthly income in hopes that it’s just enough to help you qualify for a Chapter 7 Bankruptcy.

What types of income are included in the MEANS Test?  Continue reading →

Contact Information