Bankruptcy is not a simple process. Whether you are dealing with Chapter 7 debt relief or debating a bankruptcy exemption with a bankruptcy trustee, it is important to have an attorney with experience and knowledge representing you. Tennessee readers might be interested in a recent Chapter 7 bankruptcy fight that got all the way to the U.S. Supreme Court.
The case involves a woman who filed for Chapter 7 bankruptcy in 2010. At the center of the dispute is the ownership of an inherited IRA worth nearly $300,000. The woman inherited the money in 2001 after her mother died. The Chapter 7 trustee whose job it is to collect funds to repay creditors attempted to get at the IRA-money that the woman argues is exempt under bankruptcy rules.
Under current bankruptcy rules a debtor filing for bankruptcy can keep up to $1.3 million in a retirement account such as an IRA. The purpose of the rule is to encourage retirement saving. However, there is disagreement whether an inherited IRA should get the same protections. According to the trustee, once the money is inherited it no longer behaves like retirement money. The court is expected to render its decision in June.
Before someone files for Chapter 7 bankruptcy it is important that they carefully review their situation with an experienced bankruptcy attorney. In Chapter 7 bankruptcy a debtor is allowed certain exemptions including a car exemption, retirement saving exemptions and a number of personal property exemptions. To learn more about what property is exempt from Chapter 7 bankruptcy, talk to a debt relief professional.
Source: The Wall Street Journal, “U.S. Supreme Court Hears Bankruptcy Fight Over Inherited IRA Money,” Katy Stech, March 25, 2014