[CLBS] Proceeds of prepetition sale of real property in Chapter 7

[Howard Foley]

Be careful with the annuity purchase.  Look in insurance code/ annuities which says if a creditor can show the annuity was purchase to defraud creditors it can be set aside. 

-----Original Message-----
From: CLBS [mailto:clbs-bounces at admws.idaho.gov] On Behalf Of Randal French
Sent: Wednesday, December 31, 2014 12:26 PM
To: Bankruptcy list
Subject: Re: [CLBS] Proceeds of prepetition sale of real property in Chapter 7



Sounds like a reason to not file a bk, no matter what the client does.  

Sounds like a reason to sell the note and purchase an annuity if there is any significant value to the note.  Otherwise, the entire value of the note is subject to execution.

Converting the proceeds to any exempt asset gives rise to at least a colorable claim for a denial of discharge under 727(a)(2).  The issue in dispute would be the intent, whether or not the intent was to hinder, delay or defraud a creditor by means of the transfer.  Somehow courts distinguish between a an intent to enhance exemptions from an intent to hinder delay or defraud a creditor, apparently based upon the testimony given and the demeanor of the witness.  Given that both intents lead to the same result, and the consequence of each is the other, - converting non-exempt assets always leads to a transfer that hinders or delays a creditor from getting to the now exempt asset.  But, unless the amount at issue is large, the cost of litigating that issue may outweigh any benefit in converting non-exempt assets into exempt assets.

If you pursue the course, the client should avoid filing a bk for a long long time.  727(a)(2) looks at transfers within the year before the petition date.  I would advise a client under this set of circumstances to wait for as many years as possible, perhaps even try to avoid filing any bk at all.  Even having a garnishment of 25% of the amount being received is better than exposing the entire amount to execution, or having a ch 7 discharge denied.

Good luck.  


-----Original Message-----
From: CLBS [mailto:clbs-bounces at admws.idaho.gov] On Behalf Of Ford Elsaesser
Sent: Wednesday, December 31, 2014 10:44 AM
To: cldlaw at gmail.com; 'Michael Jacques'; CLBS at admws.idaho.gov
Subject: Re: [CLBS] Proceeds of prepetition sale of real property in Chapter 7



Clearly non-exempt property of the estate-converting to cash and then exempt property carries real risk of its own-ford

-----Original Message-----
From: CLBS [mailto:clbs-bounces at admws.idaho.gov] On Behalf Of Catherine Dullea
Sent: Wednesday, December 31, 2014 9:29 AM
To: 'Michael Jacques'; CLBS at admws.idaho.gov
Subject: Re: [CLBS] Proceeds of prepetition sale of real property in Chapter 7

I'm pretty sure it's totally unprotected, but I wonder if she could sell the note and purchase an annuity.  Anyone think this might work?

-----Original Message-----
From: CLBS [mailto:clbs-bounces at admws.idaho.gov] On Behalf Of Michael Jacques
Sent: Wednesday, December 31, 2014 8:42 AM
To: 'CLBS at admws.idaho.gov'
Subject: [CLBS] Proceeds of prepetition sale of real property in Chapter 7

I have a potential client who needs to file a Chapter 7 but currently receives and lives on payments from a sale of real property which she holds a deed of trust to.  How will those payments be treated in a chapter 7?

Any help is appreciated.


Michael Jacques
JACQUES LAW OFFICE, P.C.
Office: (208) 344-2224
Fax: (208) 287-4300
 
CONFIDENTIALITY NOTICE: This is intended for the confidential use of the named recipients and is covered by the Electronic Communications Privacy Act, 18 U.S.C. §§ 2510-2521. It may contain information that is privileged, confidential and/or protected from disclosure under applicable law, i.e.
attorney client privilege, work product, etc. If you are not the intended recipient of this transmission, please notify the sender immediately by telephone and do not distribute or copy this transmission.


_______________________________________________
CLBS mailing list
CLBS at admws.idaho.gov
http://admws.idaho.gov/mailman/listinfo/clbs

_______________________________________________
CLBS mailing list
CLBS at admws.idaho.gov
http://admws.idaho.gov/mailman/listinfo/clbs
_______________________________________________
CLBS mailing list
CLBS at admws.idaho.gov
http://admws.idaho.gov/mailman/listinfo/clbs



_______________________________________________
CLBS mailing list
CLBS at admws.idaho.gov
http://admws.idaho.gov/mailman/listinfo/clbs

!SIG:54a44e23103631386962017!