What Happens If I Open a Retirement Account Right Before I File Bankruptcy?

!±8± What Happens If I Open a Retirement Account Right Before I File Bankruptcy?

Filing bankruptcy is not something that anyone would call convenient. In fact, most people who file or are considering filing are doing so because their lives have become complicated by a variety of circumstances and decisions surrounding their finances. Oftentimes, when a client comes to see me, debt collectors are calling night and day, threatening to call their boss or family. They are tired of worrying about what is going to happen to them and their family. They want to file right away.

It is just this moment, after I listen to them tell me why they want to file bankruptcy, that I explain to them the bankruptcy process. It is important that I have a complete understanding of their financial situation before I file their bankruptcy petition. Then I start firing questions at them until they feel like they're being interrogated. I ask them about their credit cards, mortgage, and bank accounts. I ask them what bills they've paid to creditors in the last 90 days. I ask them all the questions that they've been told it wasn't polite to ask.

One of the questions I'm going to ask is how much cash they have, whether or not it's in a bank account or hidden under their mattress. This is a crucial question, because if they have too much cash on hand when they file their petition, the bankruptcy trustee might try to get her hands on it.

If I discover that they have a lot of cash, that's when we go into "pre-filing planning" mode. You might be wondering why someone with extra cash is planning on filing bankruptcy. One example might be someone who was giving a large severance payment right before being laid off, or, as in the case below, they just got a tax return.

Depending on your circumstances, it might be wise to take some money and put it into what is called an "exempt" asset. An exempt asset is one that is protected by the bankruptcy rules from being sold to pay your creditors.

Sound fishy? Transferring property before you file bankruptcy can certainly land you in hot water, but there isn't a simple black or white answer.

Judge Elizabeth Brown of the District of Colorado Bankruptcy Court addressed this issue recently in a decision she wrote in In Re. Beaudin. In that matter, the debtor, Beaudin, hours before he filed his bankruptcy petition, took his tax refund and opened an individual retirement account (an "IRA") with it.

Judge Brown's concise analysis of Beaudin's actions hinged on whether or not his actions were fraudulent. The decision refers to the "badges of fraud" that have been developed in connection with fraudulent transfer. Among the questions that must be asked to determine if a fraudulent transfer has taken place are: 1) whether the conversion was disclosed or conceal; 2) whether the debtor was being sued or threatened with suit when the conversion was made; 3) whether the conversion was of substantially all of the debtor's assets; 4) whether the debtor absconded; 5) whether the debtor removed or concealed assets; 6) whether the debtor was insolvent or became insolvent shortly after the conversion; 7) whether the conversion occurred shortly before or after a substantial debt was incurred; and 8) whether the debtor retained control of the property which was transferred.

Judge Brown goes on to list several other "badges of fraud" and empathizes with bankruptcy attorneys who struggle with how to counsel clients. In the end, however, she decided that Beaudin's actions were not fraudulent. In doing so, she notes that Beaudin completely disclosed the timing and the source of funds he used to fund the IRA. She also notes that if Beaudin had waited to file, his bankruptcy estate would gotten none of his tax return and instead paid ,100 in his bankruptcy estate. While Judge Brown's decision doesn't establish a black and white line as to what is proper pre-filing planning, but she is clear that maximizing exempt property is proper.

As Beaudin shows, filing bankruptcy requires more than an ability to prepare paperwork. If you are considering bankruptcy, talk to a bankruptcy attorney before you file. But even if you don't hire an attorney, remember that if Beaudin had not disclosed the IRA in his petition he would have had a much more serious problem on his hands than collectors hounding him: he would have gotten a visit from the FBI.

What Happens If I Open a Retirement Account Right Before I File Bankruptcy?

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The Resurgence of Bedbugs in America

!±8± The Resurgence of Bedbugs in America

Bed bugs are forging a gigantic revival in the West. They were practically wiped out in the Fifties due to the extensive use of DDT, which has since been proscribed. It took them forty to fifty years to recover, but in 1995 they started their comeback. In 2004, there were 82 cases of bed bugs in New York, but only five years afterward, in 2009, that figure had boomed to 10,985.

Of the top three Western cities with bed bug problems, two of them are in the USA. First is Colorado, Ohio, second is New York and third is Toronto, Canada. Luckily, bedbugs do not transmit human diseases, although there is no known reason why they should not. They feed by inserting two tubes into the host's skin and squirting spittle that contains anaesthetic and anticoagulant through one and sucking blood with the other.

This injection of spittle means that bedbugs can feed on you without you even being aware of it, although that same saliva is responsible for the allergic reaction that most people undergo in the form of red marks, swelling and itchiness.

Once bedbugs have established themselves in a property, and by the time you see them, there is normally a serious infestation in your premises, they are very hard to get rid of.

Once infested, you could have hundreds or even thousands of bedbugs. If you let it get this far, you will have to call in expert pest controllers and you may also have to throw out a lot of your furniture including your bed.

The main hiding places for bedbugs are mattresses, sofas, drapes, clothing, pillows and rugs. They may have to be thrown out as well. In very severe cases, you will have to move out for weeks while your dwelling is being treated.

Other favourite hiding locations are furniture, the bed frame, skirtings, architrave, loose wall paper and broken plaster. Sometimes whole plasterboard partition walls will have to be taken down, as might skirtings and architraves. Another way of fighting bedbugs is to seal this woodwork off with caulk, mastic or silicone.

The problem is that even if you get rid of your bedbugs, you may get them back very easily. Just as easily as anyone else can. This is because bedbugs like to hitch a lift. They do this by attaching themselves to your clothing, say, under your collar, in your pocket or in the lining and letting you take them home, where they can begin a new infestation.

In Denver, staff at the central library discovered that bedbugs were spreading themselves inside the spine of their books. The fact is that you cannot forecast where you will not uncover bedbugs. Infestations in judges' chambers, dentists' offices, doctors' surgeries, cinemas, buses, taxis, schools and waiting rooms have all been fumigated.

It is time to be aware of bedbugs, they are not a serious health threat, but they are not nice either. Nobody wants them. So, keep your eyes open, be careful of buying second-hand furniture and wash your clothes in very hot water or dry clean them if you are able to.

The Resurgence of Bedbugs in America

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