trust to disperse funds in Sept, filing Ch 13 in June

[howdidigetth]

My husband has a trust account that was set up over 15 years ago. The remainder is set to payout September of this year. We need to file 13 to stop the foreclosure on our house and payback our arrearages ( over 75k). Anyone know what happens to the trust? We could take money out early and pay some medical/dental/car repairs and home repairs that need to be done but is that allowed?

He also had a lung transplant (which is why we need to file) and we pay over 7k in medical expenses now with our new insurance. Was 3k but we were forced into Obamacare this year and our medical expenses have been really tough. We won't qualify for a CH 7 unless I quit my part time job so that is not an option at this time. I just don't want to lose the 20k to our second lender which I am hoping will be stripped due to what we owe 467,000 on first and value 440,000. When we took out our second our home was appraised at over 750k so we brought it up to 80% ltv even though our lender almost begged us to do 90% ltv.

Thanks so much. New to the board and I have learned so much from you all.

[justbroke]

As you are guessing, the Trust would become property of the Estate; at least the Trustee would claim that it is property of the bankruptcy estate. This is really tough to give advice. You want to talk to an asset protection specialist or bankruptcy attorney about, literally, estate planning. That is, what to do with this trust that is now ripe and ready to start disbursements. I am not a license estate planner, tax specialist, or an attorney so don't have any solid things that you could consider.

Personally, though, I'd be asking about rolling the Trust into an ERISA-qualified retirement instrument or some other exempt instrument to keep the bankruptcy estate away.

You literally may be up against the wall. Moving property (money) around so close to filing (June), it may look like "hindering, hiding, and delaying" rather than Estate and/or bankruptcy pre-planning. This is why you should start calling several (3-5) attorneys that specialize in this area... in your area... to find the next step.

Your thinking is spot on. You need to protect that asset as much as you can.