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Trustee goes after pension plans

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  • Trustee goes after pension plans

    My wife and myself exempted all 401k's, a 529 plan for son and $258 in checking account in the day of the filling.

    Not the trustee wants everything !!!
    Ch.7 filed: 2/23/2011 Discharged: 7/7/2011 Asset: Yes Case Closed: 7/30/2013

  • #2
    Originally posted by stanpendula View Post
    My wife and myself exempted all 401k's, a 529 plan for son and $258 in checking account in the day of the filling.

    Not the trustee wants everything !!!
    How is that possible? ARen't 401ks exempt BY LAW???

    Comment


    • #3
      Let me guess, this is a self settled 401k (or is it an IRA) and you placed a substantial amount of money in the accounts within the 120 days prior to filing. Something along those lines?

      As to the 529's any deposits made within the 1 year prior to filing ARE recoverable. See 11 USC 541(b)(5).

      How much money are we talking about and what are the details. With that info I may be able to tell you if you have any defense.

      Des.

      Comment


      • #4
        The definitely can't go after the 401k.

        And I am pretty sure the same applies to the IRA.

        Comment


        • #5
          Originally posted by espo1357 View Post
          The definitely can't go after the 401k. And I am pretty sure the same applies to the IRA.
          Maybe in your State but not in Arizona. Arizona specifically EXCLUDES contributions made within 120 days:

          Under ARS 33-1126:

          B. Any money or other assets payable to a participant in or beneficiary of, or any interest of any participant or beneficiary in, a retirement plan under section 401(a), 403(a), 403(b), 408, 408A or 409 or a deferred compensation plan under section 457 of the United States internal revenue code of 1986, as amended, shall be exempt from any and all claims of creditors of the beneficiary or participant. This subsection shall not apply to any of the following. . .:

          2. Amounts contributed within one hundred twenty days before a debtor files for bankruptcy.
          _______

          There is a similar provision for contributions to IRA accounts.

          If my assumptions are correct, OP did not discuss this with an attorney, opted to place large sums of $$ in such accounts thinking the $$ would be protected and then failed to wait. I’ve seen this before and no doubt will see it again. Now, again if my assumptions are correct, if he did tell an attorney about this and was not properly advised then that attorney may have committed malpractice.

          Des.

          Comment


          • #6
            Dear Des,

            let me present you the accounts:
            1. 401k with Citi, opened in 1999, NOTHING contributed for the last year or this year (zero dollars) - the only thing I did, I kept re-balancing until I got a rate of return of 28% - now there are over 100 grand in it
            2. 401k opened in 2003 for wife with tRowe Price, 30 grand in it, no contributions in the last 4 years
            3. 529 opened in 2000, NOTHING added since then, trustee disputes that the 529 is a real 529 (the amount is 2700)
            4. The checking account had $258 in it, normal activity account, he wants the money ...

            He disputes the fact that the 401k are actually 401k ... How the heck do you prove that a 401k that your company is offering is a 401k????
            Ch.7 filed: 2/23/2011 Discharged: 7/7/2011 Asset: Yes Case Closed: 7/30/2013

            Comment


            • #7
              Based upon your response it sounds like your Trustee is just attempting to verify everything. You prove the 401k status by contacting the administrator of the Plan to obtain the appropriate disclosure form - not a big deal. As to the 529, the Trustee must verify that no deposits were made into it within the past year. You say nothing was deposited but he/she doesn't know if you are telling the truth. Once you have supplied all requested documents (retirement plan info, bank statements, tax returns etc.) to the Trustee's attorney and he/she has verified that all is above board you should be fine. If there are any questions you will be given the opportunity to explain and, if there is $$ to be recovered by the Trustee for the benefit of the creditors there is nothing you can do about it. It is what it is. The Trustee's job is to make sure there is nothing funky going on. Your job is to cooperate. The quicker you supply the documents requested the quicker the Trustee can finish his/her job and shut the case down.

              Des.

              Comment


              • #8
                Yep, this sounds more like an attempt to verify that the 401(k)'s are legitimate 401(k)'s and that you have complied with all the requirements to maintain the 401(k). So, Desp instincts were right, these appear to be self settled 401(k)'s, hopefully you crossed all your T;s and dotted all your i's

                But basically, Desp is correct, you need to have your documentation ready to provide the trustee. Either you are pro se or opted for cheap, no service, attorney...otherwise, you wouldn't be having these issues.

                Comment


                • #9
                  our attorney was a flat fee attorney, not very cheap ... then he became The Boss and he gave us another attorney from his firm ... the fee agreement specified that if we get to these issues we'd have to hire him by the hour ... with $275 ... I am torn between changing him (with who?) or to go forward with him .... I will let his Boss know that we are not happy with him, though, although I don't know what good this will do to us

                  it's bad not to trust the man who is supposed to be in your corner ... I have to question his every move and answer
                  Ch.7 filed: 2/23/2011 Discharged: 7/7/2011 Asset: Yes Case Closed: 7/30/2013

                  Comment


                  • #10
                    Originally posted by stanpendula View Post
                    our attorney was a flat fee attorney, not very cheap ... the fee agreement specified that if we get to these issues we'd have to hire him by the hour ... with $275 ...
                    This arrangement is not unusual. Flat fees usually get you through the 341 and do not include an investigation by the Trustee, US Trustee or any particular creditor. We do the same thing but our hourly rate is higher. We typically give our clients options:

                    1. Hire us by the hour and we will review all documents before they are submitted to the Trustee and attend any deposition (2004 exam) with you. This avenue is recommended in complex cases or where the client is not "sophisticated".

                    2. If you are sophisticated enough, put the documents together and deliver them to the Trustee. (The reality is, the docs are what they are and my review of them won't change that - although I may be able to pick up on an issue and let you know about it before the Trustee does so that you are not surprised.) Assuming the Trustee is then satisfied and needs nothing else you are done. If the Trustee wants to take your deposition then you can either hire us to attend with you OR set the deposition at a date and time when you know we will be available by phone if you have a question about answering a question (no charge) OR, if there are only a few questions and no formal deposition is needed simply arrange a short conference call - again, no charge. This is the vast majority of cases.

                    The problem arises if the Trustee, after reviewing the documents, discovers $$ he can recover for the estate. Maybe you innocently paid back a family loan and completely forgot about it. Well, if the $$ was paid within 1 year of filing it is recoverable.

                    The problem I have with my clients is that they have this notion that they will not have to pay a dime. While that is true for most cases, it is not always the outcome. Then the client gets all ticked off because they don't want to pay anything. My response: "you paid mom $5,000.00. If you do not want to pay that amount to the Trustee then the Trustee will go after mom - so, let's see - you owe $200k and it is going to cost you $5k to get rid of $195k - that's a no brainer so why are you complaining?".

                    Des.

                    Comment


                    • #11
                      Originally posted by stanpendula View Post
                      our attorney was a flat fee attorney, not very cheap ... then he became The Boss and he gave us another attorney from his firm ... the fee agreement specified that if we get to these issues we'd have to hire him by the hour ... with $275 ... I am torn between changing him (with who?) or to go forward with him .... I will let his Boss know that we are not happy with him, though, although I don't know what good this will do to us

                      it's bad not to trust the man who is supposed to be in your corner ... I have to question his every move and answer
                      Unfortunately, you fell victim to the main problem with Bankruptcy attorney representation, a flat fee or full representation does not mean the same thing to the bankruptcy attorney or the court as it does to the consumer, here is why
                      "Is Full Representation the same as Total Representation"

                      However, there is no way you will find an attorney wiling to jump into the middle of an already filed case to handle these sorts of issues, so you are stuck either handling them on your own or using your existing attorney. However, as was mentioned, this is probably just an issue of documentation, if you can prove these accounts really are what they are, then you will have no problem.
                      Last edited by HHM; 04-08-2011, 11:58 AM.

                      Comment


                      • #12
                        I understand and it makes sense. Once I got past the emotions, I gathered all the Savings Plans documents - interesting enough, I found them all, even the 2004 ones, plus statements.

                        Regarding the other post, with expenses going back 1 year and taxes 4 years, I was thinking to show him more taxes (6 years), as my wife was never a money maker.

                        We'll see. Good to have you here.
                        Ch.7 filed: 2/23/2011 Discharged: 7/7/2011 Asset: Yes Case Closed: 7/30/2013

                        Comment


                        • #13
                          My attorney also objected to my claim of exemption for retirement plan money I answered the objections best I could and the judge set a hearing. (.I was upset that I 'd have to spend money that I didn't have on an attorney .I had an attorney when the original docs were filed and she was expensive but inept or worse) .
                          Last week the trustee advised me that after reading my answer that she had decided to withdraw her objection. And then she explained something that makes sense....and hopefully will help in your case too. She said that the Trustee is only given 30 days to file an objection and so they often file but upon further review realize that nothing is really wrong. I imagine that once you send in your documentation that the Trustee will withdraw her objection. You didn't mention if the objection was filed and thus requirinig an Answer or if you are still in the negotiating stages. Either way, get the documentation to her proving that you have qualified plans that are exempt.

                          Best of luck!

                          Comment


                          • #14
                            Originally posted by stanpendula View Post
                            Regarding the other post, with expenses going back 1 year and taxes 4 years, I was thinking to show him more taxes (6 years), as my wife was never a money maker.
                            Only send what they asked for. A good rule to follow in all all legal procedings is to never provide more documentation or say more than is required.
                            LadyInTheRed is in the black!
                            Filed Chap 13 April 2010. Discharged May 2015.
                            $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

                            Comment


                            • #15
                              the objection was filed, i have 20 days to provide, i already have everything, will give him everything next week. I think you're right, they are very busy and they file "blanket" objections.

                              Thanks!
                              Ch.7 filed: 2/23/2011 Discharged: 7/7/2011 Asset: Yes Case Closed: 7/30/2013

                              Comment

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