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If I File Bankruptcy, Will My Annuity Be Taken?

If I File Bankruptcy, Will My Annuity Be Taken?
By Casey Yontz – Bankruptcy Lawyer Mesa

If you have an annuity, and are fling for bankruptcy in Arizona, it is very important to seek the advice of an a bankruptcy Attorney in Arizona, because our bankruptcy laws in regards to annuities are complex.

There is new case law that was decided by the Bankruptcy Appellant Panel, at the end of 2010 (and is currently pending in the 9th Circuit Court of Appeals).  Here is a brief explanation of where everything stands now, and how your annuity could be affected.

To begin, it must be pointed out, that Arizona is a Federal bankruptcy exemption “opt out” state. What that means, is when you file bankruptcy as an Arizona resident, you must use Arizona exemptions. You cannot, in most circumstances, use Federal exemptions.

Arizona Revised Statute Section 33-1126(A)(7) states that an annuity is exempt if the following criteria are met:

“An annuity contract where for a continuous unexpired

period of two years such contract has been owned by a

debtor and has named as beneficiary the debtor, debtor’s

surviving spouse, child, parent, brother or sister, or any

other dependent family member, except for the amount

of any premium that is avoidable by a creditor as a

fraudulent transfer.”

On its face, the exemption appears very straight forward. That is, if you have an annuity, and someone related to you is listed as a beneficiary of it, it will be exempt, or protected from creditors. For years, that is how the exemption has been interpreted.

Since November 2010, however, the Bankruptcy Appellant Panel, for the 9th Circuit, decided that in order for the exemption to apply, the beneficiary must be a “dependent.” So, for example, if you have an annuity, and your adult non-dependent children are the beneficiaries of it, it would be subject to creditors, and the exemption would probably be challenged by the bankruptcy trustee.

If a non-dependent family member is beneficiary of your annuity, all is not lost. Other even more recent case law has determined that in some situations, an Arizona Debtor may use the more “debtor friendly” Federal exemption that would allow this protection, if the annuity is qualified by various sections of the Internal Revenue Code. The ability to use this exemption depends on the form of the annuity. Therefore it is very important to discuss this with your Mesa Bankruptcy Attorney.

If you have an annuity and are considering filing bankruptcy, you need to seek the advice of an Arizona Bankruptcy Attorney who has experience with this situation, because as you can see, this has become a complicated area of law.

Anyone considering filing bankruptcy should seek the advice of an experienced Arizona Bankruptcy attorney. Bankruptcy is not a “straight forward” process. Please don’t hesitate to call us to schedule a free consultation.

Call for a free consultation: (480) 447-1554

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How Do I Protect a Co-Signer? Will Chapter 13 Bankruptcy Protect My Co-Signer?

How Do I Protect a Co-Signer? Will Chapter 13 Bankruptcy Protect My Co-Signer?

Of course, many people have co-signers on a car, truck, ATV, etc. When faced with a period of economic hardship, many will not even consider bankruptcy when they have a co-signer on a debt. This is because, it is the common perception that bankruptcy will not protect a co-signer, and said co-signer will be left “holding the bag.” This is NOT TRUE. Bankruptcy can indeed protect a co-signer.

NOT CHAPTER 7 BANKRUPTCY – If you file Chapter 7 bankruptcy, the creditor can proceed against your co-signer, according to the terms of the original contract that you and the co-signer entered into, once the bankruptcy is over. If one of your major concerns is to protect a co-signer, then you should consider Chapter 13 bankruptcy.

CHAPTER 13 BANKRUPTCY CAN PROTECT A CO-SIGNER. You can protect your co-signer to the extent that the Chapter 13 payment plan proposes to repay the debt, and if certain conditions are met. The debt must be a consumer debt, that wasn’t incurred pursuant to a business transaction, and the co-signer cannot have been the sole benefactor of the debt.

If you file Chapter 13 bankruptcy, as long as you are making the required Chapter 13 planned payments, creditors cannot collect, or even attempt to collect from the co-signer. The purpose of this provision of Chapter 13 is to allow you to repay the debt without creditor pressure.

At the Yontz Law Group, we are more than happy to meet with anyone to explain their options. Contact an experienced Arizona Bankruptcy Attorney here.

Contact the Yontz Law Group, for a free consultation with a bankruptcy attorney in Phoenix, Mesa, Gilbert, Apache Junction, Chandler, or throughout the state of Arizona 602-353-7713.

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Bankruptcy and Credit Card Debt

Bankruptcy and Credit Card Debt

As a bankruptcy attorney in Arizona, one of the most common problems I’ve seen in the hundreds of bankruptcy cases I’ve handled is credit card debt.

I would estimate that in 9 out of 10 cases I handle, there is a significant amount of credit card debt owed (anywhere from $10,00 to $100,000). It’s nearly impossible for the person/couple to pay off these cards, because of a changed financial situation and the high interest rates that a lot of credit card companies charge.

I often wonder how credit card companies expect people to ever pay off a card at a 20% – 30% interest rate, which is often times the rate I see. It just doesn’t make sense. (I often also wonder why the creit card company recklessly allowed such credit).

When a client has a significant amount of credit card debt, and other non-secured debts (e.g. personal loans, medical debt, etc.), I first see whether or not the client, based on their income and family size, will qualify to file for Chapter 7 bankruptcy protection.  Chapter 7 bankruptcy, virtually wipes the slate free of credit card debt, and other non-secured debt. It is a “one and done” filing, and not a re-payment plan like Chapter 13 bankruptcy.

Chapter 7 is perhaps the most useful tool someone with primarily credit card debt, or other unsecured debt, can use to discharge their debt, and start over again.

If you have a lot of credit card debt, you don’t have to work the rest of your life to pay high interest rates. You have options. Here at the Yontz Law Group, we are more than happy to meet with anyone to explain their options. Contact an experienced Arizona Bankruptcy Attorney here.

Contact the Yontz Law Group, for a free consultation with a bankruptcy attorney in Phoenix, Mesa, Gilbert, Apache Junction, Chandler, or throughout the state of Arizona 602-353-7713.