Bankruptcy

[Bjorn]

Aloha,

This maybe more of a legal question but I'll try.....

A customer has a likely bankrupcty. He wants to put $3,000.00 into a variable annuity.

Of course laws vary by state. Does anybody have any general rules of thumb on if this variable annuity can survive a bankruptcy.

.Mahalo

[Bees Knees]

Of course laws vary by state. Does anybody have any general rules of thumb on if this variable annuity can survive a bankruptcy.

No, but I'll give you my personal opinion. I believe the bankruptcy court should be able to un-do anything you do for a period of say, 3 years, prior to filing for bankruptcy.

[WhiteOleander]

No, but I'll give you my personal opinion. I believe the bankruptcy court should be able to un-do anything you do for a period of say, 3 years, prior to filing for bankruptcy.

I agree with this to a point.

My husband was running a sheet metal shop with another person. They did a pretty big job and were paid. About 3 months later they get a letter from a lawyer demanding a return of all the funds paid. The person had filed bankruptcy before my husband began the job. But, they had no idea. They were told they had received preferential treatment.

They called an attorney for themselves. But, that is the law. They had to return the money. So, they were out not only the money for their work, but also all the materials. It was a very hard hit. And definately not equitable to them.

So, I don't think all things should be allowed to be undone.

[JON]

3 years

I think three years is a bit much. They can go back as far as they think transactions were done in a manner that they knew bankruptcy was going to happen.

They always go back to show if any payments were done showing a preference as to creditor payments.

If you buy an annuity and file within a few months good luck.

Remember the creditors are at the table and will have a lot of input.

[Davc]

I agree with this to a point.

My husband was running a sheet metal shop with another person. They did a pretty big job and were paid. About 3 months later they get a letter from a lawyer demanding a return of all the funds paid. The person had filed bankruptcy before my husband began the job. But, they had no idea. They were told they had received preferential treatment.

They called an attorney for themselves. But, that is the law. They had to return the money. So, they were out not only the money for their work, but also all the materials. It was a very hard hit. And definately not equitable to them.

So, I don't think all things should be allowed to be undone.

Bankruptcy is never equitable to creditors. By why should a new debt be paid while the old debts aren't? At least your husbands debt wasn't included in the bankruptcy and so collection efforts may still be pursued.

[WhiteOleander]

Bankruptcy is never equitable to creditors. By why should a new debt be paid while the old debts aren't? At least your husbands debt wasn't included in the bankruptcy and so collection efforts may still be pursued.

That's my point. They were not creditors per se. They were hired after the company had filed for bankruptcy. But, my husband's company did not know that the company had filed. They did the job in good faith. So, they were out many 10's of thousands of dollars for the materials alone. Not to mention the money they paid in wages to their employees, etc. because the company did not tell them their financial standing. They took a hit and could not recoup their money.

[Bees Knees]

They were hired after the company had filed for bankruptcy. But, my husband's company did not know that the company had filed. They did the job in good faith. So, they were out many 10's of thousands of dollars for the materials alone.

Bees Knees bankruptcy rule number 1. The bankruptcy court can un-do anything you do for a period of 3 years prior to filing for bankruptcy.

Bees Knees bankruptcy rule number 2. If you file for bankruptcy, you are required to tell any new venders you hire that you have filed for bankruptcy and that any money paid to them could be deemed worthless due to the bankruptcy court un-doing the transaction. If you don't inform vendors, your bankruptcy petition is null and void and you have to start all over again.

Any other issues you want me to iron out?

[WhiteOleander]

Bees Knees bankruptcy rule number 1. The bankruptcy court can un-do anything you do for a period of 3 years prior to filing for bankruptcy.

Bees Knees bankruptcy rule number 2. If you file for bankruptcy, you are required to tell any new venders you hire that you have filed for bankruptcy and that any money paid to them could be deemed worthless due to the bankruptcy court un-doing the transaction. If you don't inform vendors, your bankruptcy petition is null and void and you have to start all over again.

Any other issues you want me to iron out?

I vote for that!!! Why can't us regular people write the laws so everyone gets a fair shake?

[Bees Knees]

I vote for that!!! Why can't us regular people write the laws so everyone gets a fair shake?

Bees Knees bankruptcy rule number 3. Lawyers have a conflict of interest concerning bankruptcy. Therefore, no Congress member who is a lawyer by trade or has taken any money from the legal special interest profession is allowed to vote on any legislation concerning bankruptcy.

[newbie]

Bees Knees bankruptcy rule number 3. Lawyers have a conflict of interest concerning bankruptcy. Therefore, no Congress member who is a lawyer by trade or has taken any money from the legal special interest profession is allowed to vote on any legislation concerning bankruptcy.

I like this rule.

That's my point. They were not creditors per se. They were hired after the company had filed for bankruptcy. But, my husband's company did not know that the company had filed. They did the job in good faith. So, they were out many 10's of thousands of dollars for the materials alone. Not to mention the money they paid in wages to their employees, etc. because the company did not tell them their financial standing. They took a hit and could not recoup their money.

It seems you could take another avenue here and put a lein on the property so at some point you may get something, although it may be years down the road.

We had someone very close to us file because they got into a bad situation. They were silent partners in a business operation and didn't keep tabs on the managing partner who ran up bills and credit cards beyond belief. They felt they had two options - come up with $120,000 or file bankruptcy. They didn't have resources for money so they filed. They had an account receivable for $50,000 that the lawyer tried to talk them into selling the receivable and putting into an education IRA which would not be "taken" in the bankruptcy. They opted not to do this as it should belong to the creditors and if they had another $120,000 they would not be filing at all.

They could not leave out any creditors and had to testify to this, however after they filed they could go back and pay their creditors back. They had to list any creditors they paid more then $600 in the last 90 days, if the debt was not secured it was considered a preference item and the money had to be given back to the bankruptcy estate and would be distributed to all the creditors who filed a claim. If no claim was filed by the creditor they would not receive anything.

[Davc]

That's my point. They were not creditors per se. They were hired after the company had filed for bankruptcy. But, my husband's company did not know that the company had filed. They did the job in good faith. So, they were out many 10's of thousands of dollars for the materials alone. Not to mention the money they paid in wages to their employees, etc. because the company did not tell them their financial standing. They took a hit and could not recoup their money.

A creditor is simply a party to whom money is owed. All of the creditors included in the BK also were also acting in good faith. Your husband's company, by not being included in the BK, has options not available to the other creditors. I'm not saying they didn't get shafted, just that so did a lot of other people, possibly worse.