BANKRUPTCY FILING ERROR COSTS DEBTOR $38,796.81!

Flint Bankruptcy lawyer points out Nojokebeingbroke.com says it all and when your bankruptcy lawyer error cost you there is no excuse.




Bankruptcy attorney Terry Bankert posts on a case where an exemption, allowing the debtor to keep the value, was denied because the debtor i.e. debtors lawyer cited the wrong code section for the exemption.



EASTERN DISTRICT OF MICHIGAN BANKRUPTCY COURT. BANKRUPTCY FLINT ,ATTORNEY POSTING BY Flint Bankruptcy Lawyer Terry R. Bankert 810-235-1970.[Comments of Flint Bankruptcy lawyer Terry R. Bankert ,810-235-1970 ,in bracket or CAP headlines. If you have bankruptcy questions call today-trb.810-235-1970 this article presented in a SEO format]


See: United States Bankruptcy Court, Eastern District of Michigan Southern Division,In re: Robert E. Schoof, Jr. and Laura K. Schoof, Case No. 10-60887-R

Debtors. Chapter 7,Signed on March 24, 2011,/s/ Steven Rhodes,Steven Rhodes,United States Bankruptcy Judge

___________________________________/

Flint Bankruptcy Lawyer Terry R. Bankert post and comments on an Opinion Regarding Objection to Exemptions





Background I.



ITS ABOUT LIFE INSURANCE



In 1988, Robert and Laura Schoof purchased reciprocal life insurance policies in the amount of $50,000 each from Northwestern Mutual Whole Life Insurance.

CASH SURRENDER VALUE

The Schoofs filed for chapter 7 relief on June 29, 2010. Robert Schoof listed the cash surrender value of his policy as $20,522.26.

CLAIMED AS EXEMPTION , THEY WANT TO KEEP THIS VALUE AFTER BANKRUPTCY

Laura Schoof listed the cash surrender value of her policy as $18,274.55. The Schoofs claimed the policies exempt pursuant to 11 U.S.C. § 522(d)(7) in the amounts of $20,522.26 and $18,274.55, respectively.

TRUSTEE OBJECTS, THEY CAN HAVE THE POLICY TRUSTEE WANTS SURRENDER VALUE



The trustee filed an objection to the Schoofs’ exemptions, arguing that the statute provides an exemption for the policy itself, but not the cash surrender value of the policies.



DEBTOR SAYS OH NO YOU DON’T THESE ARE UNMATURED



The Schoofs responded that because the policies are unmatured they are entitled to an exemption for each, regardless of the value.



THE LAW II.



DEBTOR SAYS THE LAW IS ON OUR SIDE

Section 522(d)(7) permits a debtor to exempt “[a]ny unmatured life insurance contract owned by the debtor, other than a credit life insurance contract.”

LEGISLATIVE HISTORY

According to the legislative history, the exemption “refers to the life insurance contract itself. It does not encompass any other rights under the contract, such as the right to borrow out the loan value. Because of this provision, the trustee

may not surrender a life insurance contract, which remains property of the debtor if he chooses the Federal exemptions.” H.R. Rep. No. 595, 95th Cong., 1st Sess. 361, reprinted in 1978 U.S.C.C.A.N. 5787, 5963, 6317.



WHAT ARE THEY THINKING!

The rationale for § 522(d)(7) was carried over from the Bankruptcy Act. See Brown v. Swartz (In re Swartz), 18 B.R. 454, 456 (Bankr. D. Mass. 1982) (citing In re Fount-Wit Distribs. Of So. Jersey, Inc., 4 B.R. 424, 427 (Bankr. D.N.J. 1980)). In order to exempt a policy under the Act, however, a debtor had to first pay the cash surrender value of the policy to the trustee. Swartz at

456.



ON THE OTHER HAND

On the other hand, § 522(d)(8) permits the debtor to exempt life insurance cash value:

The debtor’s aggregate interest, not to exceed in value $11,525 less

any amount of property of the estate transferred in the manner

specified in section 542(d) of this title, in any accrued dividend or

interest under, or loan value of, any unmatured life insurance contract

owned by the debtor under which the insured is the debtor or an

individual of whom the debtor is a dependent.

11 U.S.C.A. § 522(d)(8) (footnote omitted).

CASH SURRENDER VALUE NOW AN EXEMPTION

With the introduction of the Code, and adoption of § 522(d)(8), Congress

indicated that it intended to allow debtors to continue to exempt life insurance

policies, and, in addition, created a new exemption in the cash surrender value that had traditionally been turned over to a trustee as a condition of policy retention.



In re Swartz, 18 B.R. at 456. While § 522(d)(7) “does not encompass any other rightsunder the contract,” § 522(d)(8) allows for the exemption of dividends or interests accrued under a contract. See H.R. Rep. No. 95-595, at 361 (emphasis added); § 522(d)(8).



It is through § 522(d)(8) that Congress has allowed for exemption of

dividends and interests such as cash surrender value. In re Swartz, 18 B.R. at 456.



In re Steiner, 2010 WL 4687955, *4 (Bankr. D. Idaho Nov. 10, 2010) (“[A]ll that is exempted by § 522(d)(7) . . . is the life insurance policy itself, and not a debtor’s rights under the policy. . . . If a debtor wishes to protect dividends or interests that have accrued under a policy, such as a policy’s

cash surrender value, he or she must claim exemption in that interest under § 522(d)(8)[.]”);



see also

In re Oxford, 274 B.R. 887 (Bankr. D. Idaho 2002).

Accordingly, the trustee’s objection is sustained.

Not for Publication

---end

If you have bankruptcy question please contact Terry R. Bankert 810-235-1970 or http://www.attorneybankert.com/




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FLINT BANKRUPTCY ATTORNEY PRESENTS THE NEED FOR CREDIT COUNSELING.

BANKRUPTCY FLINT ATTORNEY POSTING BY Flint Bankruptcy Lawyer Terry R. Bankert

See:UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION ,In re: Case No. 11-44277,RASUL ALFURATI, Chapter 7,Debtor. Judge Thomas J. Tucker. March 14, 2011[Comments of Flint Bankruptcy lawyer Terry R.Bankert ,810-235-1970 ,in bracket or CAP headlines. If you have bankruptcy questions call today-trb. ]



THIS CASE CONCERNS AN ORDER DENYING MOTION TO REINSTATE CHAPTER 7 CASE

This case is before the Court on Debtor’s motion entitled “Motion to Reinstate Chapter 7

Case,” filed on March 10, 2011 (Docket # 13, the “Motion”), which this Court construes as a

motion for reconsideration of, and for relief from, the Court’s March 8, 2011 Order dismissing

this case (Docket # 9).

YOUR MOTIONS MUST FIND A PALPABLE DEFECT

The Court has reviewed and considered the Motion, and finds the Motion fails to

demonstrate a palpable defect by which the Court and the parties have been misled, and that a

different disposition of the case must result from a correction thereof. See Local Rule 9024-

1(a)(3).

In addition, the Court notes the following.

NO EXCUSABLE NEGLECT

First, the allegations in the Motion do not establish excusable neglect under Fed.R.Civ.P. 60(b)(1), Fed.R.Bankr.P. 9024, or any other valid ground for relief from the order dismissing this case.

DEBTOR DID NOT GET REQUIRED CREDIT COUNSELING TIMELY

Second, Debtor is not eligible to be a debtor in this case under 11 U.S.C. § 109(h)(1).

That provision provides in relevant part, that an individual may not be a debtor under this title unless such individual has, during the 180-day period preceding the date of

filing the petition by such individual, received from an approved

nonprofit budget and credit counseling agency described in section

111(a) an individual or group briefing (including a briefing

conducted by telephone or on the Internet) that outlined the

opportunities for available credit counseling and assisted such

individual in performing a related budget analysis.

CREDIT COUNSELING REQUIRED BEFORE THE FILING

Debtor only received credit counseling after the petition was filed. Debtor filed a voluntary

petition for relief under Chapter 7 on February 20, 2011 at 11:20 p.m. Eastern Standard Time,

which equates to 8:20 p.m. Pacific Standard Time (“PST). On March 9, Debtor filed a

Certificate of Counseling which states that on February 20, 2011 at 9:23 p.m. PST, Debtor

received “an individual [or group] briefing that complied with the provisions of 11 U.S.C.

§§ 109(h) and 111.” (Emphasis added). With exceptions not applicable here, 11 U.S.C.

§ 109(h)(1) requires a debtor to obtain credit counseling before filing a bankruptcy petition.

For all of these reasons, ,

IT IS ORDERED that the Motion (Docket # 13) is denied.
 
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