In re Silverman

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oh no We sold our house TT seized the moneyI have written several times about exempting assets in bankruptcy.  The gist is that in a Chapter 7 bankruptcy, the debtor gets to keep all assets that are exempt using the appropriate exemption table, but the Chapter 7 Trustee assigned to the case is empowered to seize and liquidate the nonexempt assets for the benefit of the debtor’s creditors.  And in other chapters the value of the nonexempt assets is one of the factors that are used to determine how much the debtor must repay the general unsecured creditors through the plan.

I have also written about the six-month reinvestment requirement for a homestead exemption after a debtor receives the exempt proceeds from the sale of the debtor’s primary residence.  The idea here is that if the debtor has nonexempt equity in the primary residence, the Chapter 7 Trustee will sell the property for the benefit of the creditors, and write the debtor a check for the exemption amount; but the debtor must reinvest the proceeds in a new domicile within six months of receiving the check from the Trustee or else the Trustee can reclaim the money.

When the Trustee sells a nonexempt asset, the sale is, from the debtor’s perspective, an involuntary sale.

In this post I will discuss what happens to the homestead exemption when the debtor voluntarily sells the primary residence, either in bankruptcy, or outside of bankruptcy.
Continue Reading Voluntary Sales And The Homestead Exemption

In my last post, I discussed retirement contributions within the Chapter 7 context.  Our attention now turns to retirement contributions in a Chapter 13 bankruptcy.

II.        Retirement Contributions In A Chapter 13 Bankruptcy

In discussing Chapter 7, I referred to Form 22A.  The Chapter 13 analogue is Form 22C, which is very similar to Form 22A; but there are some differences.

One difference is Form 22C’s line 55, which permits a debtor to list “Qualified retirement deductions.”  There is no analogue to Form 22C’s line 55 in Form 22A.  This indicates that the Commission that created Form 22 (Form 22A for Chapter 7, Form 22B for Chapter 11, and Form 22C for Chapter 13) believed that Congress wanted Chapter 13 debtors, but not Chapter 7 debtors, to able to contribute to their retirement —presumably to “encourage” debtors to go into Chapter 13, so that their creditors would receive something through the Chapter 13 plan.

Why did the Commission include line 55 in Form 22C?  The best explanation is found in 11 U.S.C. § 541(b)(7).  A little background will help to understand that statutory subsection and its application to the creation of Form 22C.
Continue Reading Can I Continue To Contribute To My Retirement While In Bankruptcy? (Part 2)