《楊清泉律師專欄》CHANGING EXEMPT ASSETS INTO NON-EXEMPT ASSETS IN BANKRUPTCY(二)

《楊清泉律師專欄》CHANGING EXEMPT ASSETS INTO NON-EXEMPT ASSETS IN BANKRUPTCY(一)

On the other hand, if debtor did not make the pre-petition transfer, he would be able to keep his house by claiming it as exempt homestead under 704.730 which provides a $100,000 exemption for the equity of debtor’s residence. If he did not make the transfer, he would still have his house, still have his equity of $100,000 and would not have to move into his car.

PRE-PETITION CHANGE OF NATURE OF ASSET:
Another typical action by debtor is changing the nature of the asset, thinking he has made a brilliant legal move to save his asset. To illustrate, debtor has a 401K of $50,000 which he believes he will ‘lose’ when he files for bankruptcy. So, he liquidates the 401k and keeps the $50,000 in cash under his mattress. By hiding the money under his mattress, debtor believes he has hidden the money from bankruptcy court. Debtor believes he cannot hide his 401K from the court because his 401K is kept in a bank. Retirement accounts, such as IRA, 401K, 403(b) etc. are exempt up to $1.0 million under the new bankruptcy code. When debtor liquidated his 401K, he changed the nature of the $50,000 from exempt as a retirement account, to non- exempt as ordinary cash.

Lawrence Bautista Yang is a graduate of Georgetown University Law Center and has been in law practice for thirty years. He specializes in bankruptcy, business and civil litigation and has handled more than four thousand successful bankruptcy cases in California. He speaks Mandarin and Fujien and looks forward to discussing your case with you personally. Please call (626) 284-1142 for an appointment at 1000 S Fremont Ave Bldg A-1 Suite 1125 Unit 58 Alhambra, CA 91803.