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Ch 7 and Monies held for grandson

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    Ch 7 and Monies held for grandson

    My wife & I are seniors and will be filing for CH 7 sometime next spring. We have a grandson that was severely injured in an auto accident when he was 12 and was awarded a settlement by the insurance company. The settlement was disbursed last year when he reached 18 and he had Grandma put it in a joint account so they both had to sign before he could get the money. This is HIS money!. I know that technically it is an asset if we file BK. Is there anything we can do to protect this? We have all the docs showing insurance disbursement to him and the deposit to our savings that showed a balance of 5$ before we deposited and disbursements relating to him buying clothes and for school as he is going to a JC in the area. This is Killing my wife and we are desperate to find an answer. HELP!

    #2
    I Need to update the Post. My wife DOES NOT have his name on the account. It was set up so she could TRANSFER ELECTRONICALLY to HIS Account. This was done because we are in AZ and HE is in OR. If she setup a dual signature requirement account there was no way he could get access when he needed it. Sorry about the confusion. I really hope someone can help us or a Trustee would comment on what would likely happen.

    Comment


      #3
      Originally posted by bjl61942 View Post
      I Need to update the Post. My wife DOES NOT have his name on the account. It was set up so she could TRANSFER ELECTRONICALLY to HIS Account. This was done because we are in AZ and HE is in OR. If she setup a dual signature requirement account there was no way he could get access when he needed it. Sorry about the confusion. I really hope someone can help us or a Trustee would comment on what would likely happen.
      mmm i am not really sure here but i think for all intent and purposes u are going to have problems explaining all this to the trustee.
      but again i am probably wrong
      someone like ccjoe and tcreegan will chime in.
      they will help u
      Filed chapter 7 on 9/17 341 on 10/20
      Chapter 7 Trustee's Report of No Distribution on 10/21
      Discharged and Case Closed on 12/21/2010

      Comment


        #4
        Approximately how much money are we talking about?

        Your grandson would be in a better position if he was on the account (DO NOT ADD HIM NOW), however, while you are the legal owners of the $$, he is the equitable owner. If you have not met with an attorney make sure you bring with you all of the documentation that supports the tracing of the money.

        You will be better off filing a Chapter 13. As long as there is detailed disclosure of the nature of the account it is less likely that a 13 Trustee will argue over it. If you are below median income you would opt for a 3 year 13. I would advise staying away from the 7. Assuming you can trace the funds, your grandson has a defense to the 7 Trustee taking his money however the cost of defending that position is simply not worth it. I would also advise not using one of those big mill-type firms.

        Des.

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          #5
          Since you have all the documentation concerning this money and the child is now 18 and you were holding the funds as a custodian, technically the funds are yours while you were holding them as you have access to those funds. See an attorney on this (a General Practice attorney or an estate attorney can probably help you) figure out what to do as to getting the money to your grandson and prevent issues. You need legal counsel on this matter.
          _________________________________________
          Filed 5 Year Chapter 13: April 2002
          Early Buy-Out: April 2006
          Discharge: August 2006

          "A credit card is a snake in your pocket"

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            #6
            The amount is 9K. We talked to an attorney and have scheduled another meeting to retain him on Tues. His first comment was that "letter of the law" not intent was applicable. Since we can trace the 9K all the way from the accident to the deposit and the setup of a debit card for the grandson I was hoping the Trustee or Judge would accept the transfer. As for Ch 13 - We are 65 so getting a job to supplement income has not been good. Our fixed income is 3400. We plan too save our AZ house but it will be ~ 1500/mo for utilities and house payment. Then add medical ins, car insur, tele, etc, even with BK our House we only have ~ left over for surprises in home or ??. So a 13 did not seem worth it as they say it costs a LOT more an if we get a wall mart job they take the extra income away as the trustee is notified. Or am I confused? Very possible as we are having a tough time emotionally. We have never missed a payment to anyone an the thought of BK is just awful

            Comment


              #7
              I do not think the risk is worth the 7. I would have been more comfortable if the grandson's name was on the account. I believe that if the 7 Trustee gives you a hard time the overall cost to deal with it will be more than the cost of a bare-bones Chapter 13. This, of course, is just my opinion - If you are going to do a bk I believe the 13 is the way to go. Your Plan payment could be as little as $75/month for 36 months, maybe even a bit less - just enough to pay the legal fees, trustee's fee and a tiny bit to unsecured creditors. Again, just my opinion.

              Des.

              Comment


                #8
                As others pointed out, this isn't a routine run of the mill bk anymore.
                The good news is, only $9K is at risk. Nothing in the bk code says, you can't replace that money once the bk is discharged.
                I'd suggest you really rethink your idea of saving that house. On $3400/month income a mortgage of $1500/month is close to half of your income and just isn't feasable. It won't be long until, you're broke again.
                Look at the big picture. The object of the execrise is to be in better shape once you leave bk. If you drag that sort of liability {house} through the bk, it'll jeopardize your fresh start.

                Comment


                  #9
                  Hi bjl,

                  Agree w/ keepmine, you might have to rethink the house.

                  Here a couple AZ laws that might be relevent; run them by your atty

                  A.R.S. § 33-1126(A)(5)
                  A.R.S. § 33-1126(A)(2)

                  The other factor in your case is the documentation, that is critical. There is a spot on the BK forms for "property held for others" I think you can put it there and document that you are just holding the $ for him.

                  Good luck with this, hope it all works out...

                  Tom in Colo
                  Ch7 filed 5/12/2010.....341 meeting 6/30/2010....report of no distribution 8/15/2010.....discharged 10/01/2010.....closed 11/09/2010

                  Comment


                    #10
                    Originally posted by tcreegan View Post
                    Here a couple AZ laws that might be relevent; run them by your atty A.R.S. § 33-1126(A)(5) A.R.S. § 33-1126(A)(2)
                    Sorry Tom but

                    (A)(5) does not apply as the settlement is not for damage done to an exempt item
                    (A)(2) does not apply as the funds are not "earnings"

                    There is no Arizona exemption that covers settlement proceeds.

                    Des.

                    Comment

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