Exempt Assets

Published on: February 13, 2017

Bankruptcy: 2004 Examination

Rule 2004 of the Federal Rules of Bankruptcy Procedure, notoriously referred to as the 2004 Examination, is usually used by a Bankruptcy Trustee and is similar to a deposition to a few caveats. 2004 Examinations have famously been referred to as a shipping expedition.

What Is a Rule 2004 Examination?

Rule 2004 of the Federal Rules of Bankruptcy Procedure states that “[o]n motion of any party in interest, the court may order the examination of any entity” regarding “the acts, conduct, or property or…the liabilities and financial condition of the debtor, or to any matter which may affect the administration of the debtor’s estate, or to the debtor’s right to a discharge….”

Rule 2004 is very broad and loose. There are very few procedural safeguards or objections available to improperly posed questions. The main purpose of the 2004 Examination is to discover undisclosed assets, question transactions and determine if the debtor has committed any fraud. Continue reading →

Published on: January 13, 2017

What is an asset when filing a Bankruptcy?

By Kendal Schoepfer

When you file a Jacksonville Bankruptcy, you are required by the United States Bankruptcy Code to list all of your assets in your Bankruptcy Petition. The reason being is to assist the Court, and your appointed Trustee, in figuring out which of your assets you are allowed to keep, and which of your assets you must turn over to your Bankruptcy Estate. The assets surrendered to your Bankruptcy Estate are liquidated to pay your creditors. If there is an asset you wish to keep, then you must accurately list that asset in your Bankruptcy Petition as well as the exemption (if applicable) that allows you to retain the asset.

The biggest hurdle is figuring out what your assets are and what exemptions are available to you. By definition, an asset is anything that has a value and that which can be sold or liquidated in order to pay your debts or commitments. The most common looked over assets are whole life insurance policies, as well as insurance policies in which you are the named beneficiary, accrued or unused vacation pay, timeshares, season tickets, unpaid insurance claims, security deposits, class action lawsuits, trademarks, liquor licenses, divorce settlements and tax refunds.

I cannot stress to you enough the importance of disclosing all of your assets. One accidental omission could have devastating consequences. Take this situation as an example:

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Published on: July 26, 2016

Is My Child’s Florida Pre-Paid College Fund safe if I file Bankruptcy in Florida?

By Kendal Schoepfer

Section 529 of the Internal Revenue Code allows parents to set up education savings accounts for their child’s future college expenses. In Florida, these educational savings accounts are most commonly known as Florida’s Prepaid College Fund or Florida’s 529 Savings Plan. These types of plans can only be established for a child, stepchild, grandchild or step-grandchild and set up in the name of the person establishing the account (for example the parent or grandparent of the child) and the funds belong to that person.

When filing bankruptcy, this means the person who established the prepaid college fund for must disclose the fund in their bankruptcy petition as an asset. I am sure you are now wondering whether or not you will loose the prepaid college fund if you have to file bankruptcy, since it must be disclosed. The answer is, it depends. There are Federal and Florida specific exemptions for these types of accounts. If the exemption applies, then the funds should be safe from your creditors and you will get to keep it if you find yourself in the dire position of having to file for bankruptcy.

In Florida, Florida Statute 222.2 defines Florida’s exemption of assets in qualified tuition programs as:
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Published on: June 20, 2016

Term v. Whole Life Insurance in Bankruptcy

By Kendal Schoepfer

Many people who are considering filing for bankruptcy have life insurance policies and do not want to loose them by filing bankruptcy. However, your life insurance policy may not actually be considered a part of your bankruptcy estate or, if it is considered a part of your bankruptcy estate, there might be an exemption that will allow you to protect it. Whether your life insurance policy will be considered a part of your bankruptcy estate first depends on what type of life insurance policy you have. The second big consideration is who the beneficiary is on your life insurance policy. There are two main types of life insurance polices, Term Life Insurance and Whole Life Insurance, which we will discuss in turn.

Term Life Insurance:

Term Life insurance is life insurance that does not have any cash value while you are alive. Instead, upon your death it will provide proceeds to your designated beneficiary. In other words, it does not mature until your death. Thus, Term Life Insurance is not considered a part of your bankruptcy estate, because there is no “cash value” for your bankruptcy trustee to administer and provide to your creditors.

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Published on: June 15, 2016

Can I purchase a vehicle right before filing bankruptcy?

By Kendal Schoepfer

One major concern clients have when making the difficult decision of whether or not to file for bankruptcy is their primary means of transportation; in other words, their motor vehicle. In most cities in the United States, having a vehicle can make the difference between being able to get to work consistently and maintain employment or not. Having a reliable means of transportation can be your lifeline. Attorneys receive many questions such as, “Do I get to keep my vehicle if I file bankruptcy?” and, “Will I be able to purchase a new vehicle.” Unfortunately, the answer is always, “It depends.” But what does it depend on?

One of the main considerations taken into account when your Trustee decides whether or not you get to keep your vehicle is whether your vehicle has any equity in it. The next consideration is whether or not you have exempted that equity. In Florida, you are only allowed to exempt $1,000.00 of equity in a motor vehicle per debtor. However, there could be other ways to protect more equity. If you are leasing your vehicle or took out a car loan to purchase that vehicle, and you currently owe your lender the full value of the vehicle or owe more than the vehicle is worth, then you can most likely keep the vehicle simply by reaffirming the lease or loan. Continue reading →

Published on: December 23, 2015

What happens to assets I acquire after my Chapter 13 Plan is Confirmed?

By Kendal Schoepfer

One of the major concerns that most people have when they begin to consider whether or not they should file a Chapter 13 Bankruptcy is what will happen to their property. Will it be taken from them or will they be able to keep it? But what most do not consider is the property that they may acquire after they have already filed their bankruptcy. It can easily be assumed that all property you own at the time you file your Chapter 13 Bankruptcy will be part of your bankruptcy estate. But what if you inherit property or are the victim in a car accident in which you have the right to file a lawsuit after filing?

First and foremost, there is a duty in a Chapter 13 to update your schedules when you acquire new assets until your Chapter 13 Plan is completed. This rule applies to property you acquire pre-confirmation as well as property acquired post-confirmation. Luckily, not every little piece of property you acquire post-confirmation requires you to update your schedules. It is suggested that only major ones require disclosure.

As a general rule, the following post-petition acquired types of property will always be considered to be a part of your bankruptcy estate and require disclosure to your Chapter 13 Trustee:

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Published on: November 18, 2015

Can I file a Personal Bankruptcy with a Multi-Member Limited Liability Company (LLC)?

By Kendal Schoepfer

Yes an owner of a LLC can file bankruptcy in Florida. There is nothing that prevents a member of a multi-member limited liability company (MMLLC) from filing a personal bankruptcy in Florida or anywhere else in the United States. Additionally, if a member files a personal bankruptcy, the assets of the MMLLC can be protected from being taken by your bankruptcy trustee to settle your personal debts. This is because assets of a Florida multi-member LLC are not considered part of your bankruptcy estate. Charging orders are the exclusive remedy against a multi-member LLC in Florida. Once a charging order is obtained any distribution you might be entitled to receive from the multi-member LLC could be taken by the party holding the charging order. Most creditors find a charging order unattractive because along with the right to obtain distributions comes the responsibility for income taxes on the income generated by the ownership interest in the Florida LLC.

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Published on: September 14, 2015

Self Created Impossibility of Compliance with Bankruptcy Court Orders is not a Valid Defense

By Kendal Schoepfer

For years people have turned to asset protection trusts and offshore accounts to protect their assets. While a trust can be a great estate-planning tool to protect your assets, off-shore accounts and trusts used to defraud your bankruptcy trustee could place a you in some very hot water. Oftentimes trustees of a trust will not distribute funds because they are able to withhold a distribution at their own discretion and a foreign bank may make the same claim.

On the outset this might seem like a great idea: the bankruptcy court cannot force the legal entity or bank to present the money and therefore the debtor doesn’t technically have to turn the assets over to the bankruptcy estate. However, a bankruptcy court will usually remedy this situation by holding the debtor in civil contempt until the repayment has been made. This means that if a trustee or bank refuses to make a distribution, the debtor could face a lot of jail time.

Another similar issue has become more frequent in bankruptcy court. In the case of In Re 1990’s Caterers LTD., a debtor admitted he had received money from a property auction that was owed to the bankruptcy estate. However, at the subsequent contempt hearing the debtor said he had spent the money so there was nothing left to turn over. The court was then presented with the issue of whether the debtor’s inability to return spent money excused the debtor from civil contempt and incarceration.

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Published on: August 28, 2015

Bankruptcy and Florida’s Homestead Exemption of Inherited Real Property

By Kendal Schoepfer

Have you inherited your parents homestead property? Do you own it free and clear from any mortgage or lien? Do you reside in the property? Are you considering filing a Chapter 7 Bankruptcy? If so, then I urge you to consult with an attorney at the Law Office of David M. Goldman, PLLC. Each one of the questions posed above are key factors in determining what affect a Chapter 7 Bankruptcy filing may have on your inherited real property.

In Florida there is a broad homestead exemption available to those filing bankruptcy; however, you must first meet some very strict requirements. If you acquired the real property at least 1,215 days (approximately 3 years and 4 months) prior to filing the bankruptcy and it is your homestead, then you may use an unlimited homestead exemption, but if you have not, then your homestead can only be protected up to $125,000. It is also important to note that you do not have to reside in the subject property as your homestead for the 1,215 days prior to filing bankruptcy in order to enjoy full protection. For example:

Your mother and father have lived in their current home in Florida as their primary residence for the last 15 years and even filed their homestead exemption with the state. When they pass away, they leave their homestead property to you; free and clear from any mortgage or lien. However, you do not move into the property and instead you continue to reside with your wife and children in another home, which also happens to be in the state of Florida and which you consider your homestead.

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Published on: July 24, 2015

Jacksonville resident fakes his own death to avoid debt

By Kendal Schoepfer

In 2013, a Jacksonville resident traveled to Venezuela for a vacation where his family claimed he passed away from a heart attack. The U.S. embassy confirmed his death in the local seaside tourist town of Rio Chico, and he was reportedly cremated. But it turns out he has been very much alive. This was confirmed recently by his appearance in a federal courtroom in Asheville, North Carolina.

Jose Lantigua’s death was all an apparent ruse; an alleged plan that would allow him to escape more than $9 million of debt that included fraudulent insurance claims. Lantigua is a 62-year-old from Jacksonville, Florida and was arrested next to his wife’s home in North Carolina. He was charged with many crimes in Florida, including 7 counts of filing fraudulent insurance claims and other fraud charges.

In Jacksonville, Lantigua seemed to be a business success. He was a former executive for Fidelity National Information Services and bought two furniture stores in 2008, which were lauded as a local favorite in a 2013 edition of the Jacksonville Business Journal. The truth about Lantiua’s death became evident after one of the insurance companies that were to pay out life insurance proceeds hired an investigator to look into the man’s death.

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