Illinois Chapter 7 issue

[despritfreya]

My attorney said , the fraudulent transfer of assets , has to do with me putting all of my bonus into my roth ira.

When you say "all" how much is "all"?

Des.

[Od0976]

100% of what I received in profit sharing bonus was put into my roth IRA , of course minus taxes and union dues

[despritfreya]

100% of what I received in profit sharing bonus was put into my roth IRA , of course minus taxes and union dues

That did not answer the question which leads me to believe the amount was at least in the 5 figures. My understanding is that the IRS allows a contribution of $6k per year ($7k if you are over 50). The ability to contribute also depends upon the amount of your income. If you exceeded the allowed amount for a particular year, the overage should be recoverable by the Trustee. If you convert to a Chapter 13, the overage will have to be provided for as part of Chapter 7 reconciliation.

I get that you are reluctant to give details but. . . the devil is in the details.

Des.

[Od0976]

Ok that makes sense but it was only 4200 after deductions. My gut feeling I will forced into a chapter 13 because of equity in home .Only allowed 15k exemption and CMA from my realtor has it at 191k . I am at 161k in amount owed currently. Pretty sure trustee found value to be in excess of 200kJust hoping for a smooth transition

[flashoflight]

You might want to roll the dice on an appraisal if your attorney has one that he uses in BK cases. This is especially true if there is a lot of expensive deferred maintenance. The appraiser can't just pick a number out of the sky like your realtor or the trustee's realtor can.

[despritfreya]

Ok that makes sense but it was only 4200 after deductions. My gut feeling I will forced into a chapter 13 because of equity in home .Only allowed 15k exemption and CMA from my realtor has it at 191k . I am at 161k in amount owed currently. Pretty sure trustee found value to be in excess of 200kJust hoping for a smooth transition

Based upon the amount placed into the Roth IRA - I see no problem. IMHO there is nothing wrong with proper pre-bk planning.

In round numbers, as to the equity over the exemption, it sounds like we are only dealing with total equity of $30k to $40k with an exemption of $15k leaving $15k to $25k for the creditors. Correct?

If correct, this is not a big deal and you should be able to work through the Chapter 7. Discuss with your attorney a settlement with the Trustee whereby you pay the non-exempt equity to the Trustee. Settle on what that amount is. This creates a controversy that allows you to do a "9019 compromise" (Google it). The potential offer would be $15k or an amount sufficient to pay all "allowed" claims, whichever is less.

How do you come up with the money? Here are a few ideas:

1. Bank of friend or family - loan
2. Pull from retirement account
3. Refinance current mortgage with cash out
4. A combination of the above.

If at all possible, stay in the Chapter 7. A quick resolution is better than 3 plus years of dealing with the system.

Des.

[Od0976]

Really appreciate feedback .Going to look into "9019 compromise" and discuss it with my attorney .

[Od0976]

Well, just spoke to my attorney and he is in agreement with trustee about bonus being deposited into my Roth IRA. Also, stated he waiting to hear back from trustee about equity home before we make decision on dismissing chapter 7 or converting to 13 ,which I prefer at this time .