Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 Archives

How are Retirement Accounts Protected in Bankruptcy?

Posted on August 28, 2020by Admin

One of the biggest concerns that clients have before making the decision to file for bankruptcy is how the case will affect their assets. Most people work hard over the course of many years to build up a nest egg that they hope will carry them through retirement. The good news is retirement accounts are protected in bankruptcy.

The protections of the bankruptcy automatic stay, which go into effect immediately upon filing for bankruptcy halt any collection activity, garnishment, and lawsuits against you.

Bankruptcy Law, Credit, Debt Relief, Timothy Kingcade Posts

What kind of credit counseling is required when you file for bankruptcy?

Posted on October 20, 2016by Admin

For many people, filing for bankruptcy is a last resort to end the challenges they face struggling with insurmountable debt. If you decide to file bankruptcy you will need to work with an experienced bankruptcy attorney and complete mandatory credit counseling through a government-approved agency.

In accordance with the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, anyone filing for bankruptcy must receive two certificates: one for pre-filing bankruptcy counseling and one for a pre-discharge education course.

This counseling typically includes a complete review of your financial situation, including current income, household budget and a list of all unsecured debt. Counselors will discuss alternatives to bankruptcy, such as consolidation, debt management, and direct negotiation with your creditors. The entire process takes up to one hour.

After filing for bankruptcy, you also must take a pre-discharge education course. This course lasts two hours and is evaluated by the Justice Department to ensure the topics are in compliance. Topics oftentimes include: budgeting, financial products and tools, credit scores, contracts and consumer protection laws.

It can also include interactive tools, including pre- and post-tests, to measure the level of knowledge about these topics, which are important to understand in order to re-establish personal finances, rebuild credit and avoid getting back in debt. These courses are available online and allow filers to meet the necessary requirements to earn their bankruptcy pre-discharge education certificate.

Here are some ways to get the most out of your bankruptcy counseling:

Make sure you receive counseling from a reputable agency (one that is not only approved by the government, but a member of the National Foundation for Credit Counseling and in good standing with the Better Business Bureau);
Commit to your credit counseling. Set aside a block of time dedicated to these sessions.
Ask the counselors to explain anything you do not understand. They will answer any questions you have, as long as they are not legal-related. These should be directed to your bankruptcy attorney.

If you are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.

Bankruptcy Law, Timothy Kingcade Posts

Are Inherited IRA’s protected in Bankruptcy?

Posted on June 16, 2014by Admin

The U.S. Supreme Court recently answered this question. In an opinion written by Justice Sonia Sotomayor the Court found that Heidi Heffron-Clark, who inherited an IRA from her mother in 2001 and filed for bankruptcy nine years later, could not protect the account from her creditors.

The court’s analysis in Clark v. Rameker ruled that there were key legal distinctions between inherited IRAs and those you set up for yourself through annual contributions or company plans. The fact that inheritors cannot put additional funds into the inherited IRA account and the beneficiary can withdrawal money at any time without incurring a penalty make these inherited IRA accounts unique and “suggest that they are not retirement assets,” the court notes.

Another key distinction: Non-spousal IRA heirs must either withdraw the entire account balance within five years of the original owner’s death, or take out a minimum amount each year, starting December 31st the year after the IRA owner died.

The Supreme Court’s decision does not affect bankruptcy protection for retirement accounts of your own, which were expanded by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.

The decision does have important ramifications for spouses. A spouse who inherits their husband or wife’s IRA has an option not available to other inheritors. The surviving spouse can roll the assets into his or her own IRA and postpone distributions from a traditional IRA until they turn 70½. However, there is a catch to this. Just like other IRA owners they may have to pay a 10% early-withdrawal penalty if the money is taken out before age 59½ from the surviving spouse’s own IRA.

If you have any questions on this topic or are in a financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.