Question about assets

[Nena 11]

My mom has a bank account (not sure if it's a CD, IRA or just savings) under my sister's and my name. It is not really MY account, it's just something my mom put under our names in case anything happened.

Do I need to tell my lawyer or list it as an asset even if it is not my money? Would the trustee get that money? My mom doesn't even know I'm filing.

Any advice?

Thanks!

[Nena 11]

Correction. My mom has me and my sister as the "owners" of a Certificate of Deposit and a savings account (both). But the money is really hers. How does that affect my filing a Chapter 13? And should I list that as an asset? I don't want the Trustee to come after me!

[HHM]

If your name is on the account as the owner, its YOUR asset, there is simply no way around it. Vis-a-vis the rest of the world (the bank, the trustee), that money looks like, and is your money. At least half of it anyway, because your sister also is on the account.

How much money are we talking about? The money will not be taken in a chapter 13, but it will be used to determine the liquidation value of your estate. The liquidation value is the minimum amount of money that must be paid to your unsecured creditors in a chatper 13.

For example, if your disposible income for your plan is only $250 per month, that means in 36 months, you would pay a total of $9000, minus 10% trustee fee, and lets say $1500 for attorney, that leaves $6600 for your creditors. Let's also assume that all your other assets are exempt except for this savings account (it probably won't be exempt) and that you are not paying anyone else in your chapter 13 plan except unsecured creditors.

If you have more than $6600 in that savings account, your chapter 13 plan (as contemplated above) would be denied. What are your options, you could extend the time of the payment plan...the max is 60 months (@ $250 per month, that is $15000), minus trustee fee and attorney fee, the total is $12000. So, if you have more than $6600 but less than $12,000, in the savings account, you could extend the length of the payment plan. However, if you have more than $12,000 in the account, your chapter 13 plan would be denied outright.

You should certainly inform your lawyer so he can advise you accordingly.

[Nena 11]

Yeah, that's what I thought. I think the $ in the account is somewhere between $20K and $40K. I have about $40K in unsecured debt. The problem is, I cannot use that money. It is not mine. If I told my mom about this, she will tell me I can't use it. It is something she's been saving for her future - ie, if she ever needs LT care or she becomes ill - then my sister and I would use that money towards her expenses. I don't know if the court will allow her to sign something saying that that money in fact it is not mine to use.

I will talk to my lawyer this week and see what he says.

I guess we can also consider debt consolidation, but creditors want the money NOW or else they'll do God knows what! Or so they have told me over the phone.

We also thought of selling our home and moving into a new one. We don't need a down payment because my husband could get a VA loan and thus, buy a house without a down payment. We could use that money to pay off our debts as there is enough equity in our house. Problem is, I don't know if our credit will afford it, and second, how long the process will take - whether it will buy us some time to have the cash to pay off everything we owe.

I don't know....

[HHM]

Since you are contemplating bankruptcy now, it might be a little late to do anything with that savings account (i.e. transfer it around).

But if that is your mother's concern, why not have her create a trust with that money where you and your sister are the Trustee's. That sounds like what she is intending...and if that has been the intent all along, you might, and I stress "might" be able to create the trust before filing and not have any objections from the trustee. (assuming your mother would sign an affidavit regarding the account).

[Nena 11]

I don't know much about law, but I wouldn't want her to know that my husband and I are filing. I am a mother myself and it would hurt to see my child going through something like this. The last thing I want to do is tell her.
Having said that, if there is something we can do or some piece of paper, like an affidavit, she could sign stating that she and only she can administer the funds of that account while she is alive, and the court and Trustee accept that, then I'm sure I'll do it, and I'm sure we'll be fine. I'll talk to my lawyer and see what he says. I'm really worried that 1) time will run out and if I wait a little longer to file, creditors will take measures against us and 2) that I will end up telling my mom.

[HHM]

You are going to have to come to grips with telling her because I don't see how you can't. There is $40,000 of her money in an account that, by all legal definitions is YOUR money. If you file bankruptcy, that money will be a factor and you need to tell your mom.

You would have to do more than simply have your mom sign a piece of paper declaring her the owner of that money, that probably won't fly. Your mother would have to set up a trust, or living trust. (A trust is a seperate legal entity).

I suppose your mom could take your name off of it, but if its "only" your sister and you on the account, I don't know that she has the power to do that anymore.

Anyway, talk it over with you lawyer.

[Nena 11]

Thanks. I will do that. I'll talk to my lawyer this week.