Retelling real-life bankruptcy stories, I’ve found, can be a big help in explaining to Bankruptcy in Indiana readers the way the bankruptcy law system works. The following story is about a Mr. F. who filed bankruptcy in Wisconsin.
In going over all the debtor’s assets and income, the court found that there were two bank accounts with around $7600 in them combined. Normally, cash like that would go towards paying the filer’s debts. As things turned out, though, most of that money was exempt.
Mr. F.’s case was of particular interest to me. Several years ago, when the new bankruptcy laws of Indiana were being written, I was asked to help. As a longtime debt consolidation lawyer offering Indiana bankruptcy help, my contribution to the effort had to do with exempt assets. When an asset is considered exempt, that means it does not need to be applied towards repaying creditors during a bankruptcy. Instead, the debtor is allowed to keep that asset for his or her own use.
As all of us in the five Zuckerberg bankruptcy law offices know, one very common category of exempt assets is retirement money. That category might include
- Military retirement payments
- Social security benefits
- Veteran’s Administration disability payments
- IRA accounts
Mr. F. in Wisconsin was actually receiving all of these benefits. So, with $7,600 to spare in the bank, what was his problem? On the surface, it sounds as if he should have been able to get along just fine.
But, as is the case with many clients of my Anderson, Bloomington, and Columbus bankruptcy lawyer colleagues, Mr. F. was not able to be fine. He had not been wasteful with his money nor overdrawn his accounts,n or built up credit card debt. He had not needed payday loan debt help or student loan debt help. What had happened is he had gotten sued. It was a personal injury claim, and Mr. F. simply did not have adequate insurance coverage to pay that claim.
The second interesting aspect of Mr. F.’s money in the bank account is that almost all of the money had been deposited into the account from retirement or disability benefits. And remember, those qualify as exempt income. The problem was, it was all mixed together in one account, along with some money that had NOT come from an exempt source.
That situation, by the way, is an excellent example of why it’s so important for anyone filing individual bankruptcy in Indiana to seek the help of an experienced bankruptcy lawyer in filling out the paperwork to submit to the bankruptcy court.
Fortunately for Mr. F., the court allowed him to go back and prove that the bulk of the money in that bank account came from exempt sources of income. The court gave him 14 days to trace all the deposits. Once Mr. F. had done that, the court ruled that the money was, in fact, exempt and did not need to be used to pay creditors.
As any good Indianapolis bankruptcy attorney can attest, following the money trail can really help debtors who file personal bankruptcy in Indiana!
Categorised in: Bankruptcy Indiana
This post was written by Mark Zuckerberg