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Asset Protection

Clients ask us “what can we keep in bankruptcy?” By the time you are thinking about filing for bankruptcy, it is usually too late to start thinking about protecting your assets. Giving away property to your friends or family or putting the property into someone else’s name is a very bad idea. You could lose your right to a discharge and the transaction could be avoided by your bankruptcy trustee.

Here are some questions people ask.

Can I put my house in the name of someone else so I don’t lose it in bankruptcy?

No. This would be a terrible idea. It would be a fraudulent transfer. The trustee could get the property back from whomever you give it to and you would also lose your right to a bankruptcy discharge.

Can I give my property to charity so that the trustee doesn’t get it?

No, this is also a fraud. The trustee can avoid this transfer and you’d lose your right to a discharge?

What can I do if I have property which the trustee could take from me in a bankruptcy case?

You could consider filing for relief under chapter 13. You have to pay a monthly payment for as long as 5 years but you get to keep your property.

Can I take the money I have and use it to pay down my mortgage debt? After all, I can have a homestead interest in my house?

You can use money you have to pay a debt. You can’t effectively use your assets to convert non-exempt property into exempt property.

I inherited an IRA from my mother. Can I keep it?

No, the Supreme Court has decided that an IRA you inherit is not the same as an IRA you established for yourself.

Can I put money into my IRA or Education Savings Account?

You can make a normal contribution but not an unusual one. You can get into trouble if you try to convert non-exempt assets into exempt property.

Can I buy a whole life insurance policy?

You can’t spend money to buy whole life insurance or an annuity if you intend to claim an exemption on the cash surrender value