EXEMPTION PLANNING IS BEST DONE BEFORE YOU BECOME EXPOSED TO A CLAIM OR LAWSUIT

fraudulent-transfer

In the worlds of debt collection and bankruptcy, assets are characterized as either  “exempt” assets or “nonexempt” assets.  “Exempt” assets are protected by law from levies, attachments, garnishments and other  methods by which creditors enforce judgments.  Nonexempt assets, on the other hand, are not protected.  Exempt assets include, among other things (and subject to monetary limits), homesteads, cars, tools of the trade, medical devices, annuities and some insurance products.

It is not uncommon for persons, as part of so-called “asset protection” strategies, to convert nonexempt assets into exempt assets.  As part of the process, an individual may take the value of an asset over the statutory exemption limit, and use the excess to buy another asset that is exempt.  For example, if the statutory exemption limit for cash is $10,000, the person might take cash balances over that amount and buy assets not previously owned that are exempt, or add to exempt assets that are already owned up to the statutory limit for that asset class.

This process is generally ok, unless the party is then subject to a lawsuit, or threatened with a lawsuit.  So-called “asset protection planning” on the eve of litigation or, God forbid, on the eve of an adverse judgment may be reversed and undone by a court under various theories, including under the prevailing fraudulent transfer law of the relevant jurisdiction.  Click here for a case where such asset protection planning was overturned by the court on fraudulent transfer grounds.

If you are presently contemplating bankruptcy, proper exemption planning can prevent the loss of thousands of dollars of property.  Proper planning takes time and a good understanding of how the exemption statutes work.

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We are a debt relief agency, we help people file for Bankruptcy under the Bankruptcy Code. This Blog is made available by the lawyer or law firm publisher for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand that there is no attorney-client relationship between you and the Blog publisher. The Blog should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

As always, feel free to drop me a line with a comment or question.

 

 

 

 

 

 

Author: westchesterbankruptcylawyer

https://www.avvo.com/assets/badges-v2.jsLawyer Ted Zink | Featured Attorney Bankruptcy

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