Bankruptcy

It's not for everyone

There are many alternatives to bankruptcy and they should be explored before making your decision. This is why at Marc R. Tow & Associates we make sure to educate our clients before moving forward with their case.

Business Solutions

Turn your business around

Filing for bankruptcy is not the appropriate business decision for every financially troubled entity. Marc R. Tow & Associates has decades of experience providing comprehensive solutions to resolving business insolvency.

Debt Settlement

A simple process

We offer a program wherein we negotiate with your creditors/CA in order to settle the debt for less than what you owe. We charge an upfront fee that can be paid through a payment plan if you wish.

Frequenty Asked Questions about Cash, Stocks, IRAs and Other Soft Assets

Q. When are my soft assets at risk?
A. Only when you, the courts, or the legislature have authorized a creditor access to them.

Q. Why would I have given a creditor such a thing.
A. Many loans contain a "set off" provision. This means if you get behind on a loan they may "set off" money from other accounts at that bank to make a loan payment.

Q. Is this the same as an automatic payment provision?
A. No, they are independent terms in the loan.

Q. Does every loan contain this clause?
A. No, If you need information on your own notes check the loan documents.

Q. Can one bank set off against balances in other banks?
A. Not others banks, but other branches of the same bank will be fair game.

Q. When does a court grant these rights?
A. Creditors must bring suit, be awarded judgment, then get an "execution". This "execution" gives them the right to seize both hard and soft assets.

Q. Can they get all my assets?
A. Not all, but most, even though this realistically doesn't happen. Seizing assets costs a lot of money for legal fees. There must be substantial value in an item to make it worth their while, but be prepared for the creditor to look for valuable and hidden assets.

Q. What kind of hidden assets?
A. Maybe property in another state, an inheritance, or property you didn't think you had a right to. Take the example of an elderly couple who put their daughter on as a signer for their bank account so if the parents became incapacitated she could get the money to pay for their health care. For the daughter's creditor if she could get at the money so could they, and they took it all!

Q. Can I keep some of these "soft" assets if I don't file bankruptcy?
A. Very few. This will vary state by state. Qualified ERISA retirement plans and a very small amount of cash may be allowed.

Q. If I file a Chapter 7 bankruptcy may I exempt all of my retirement savings?
A. This area is a little gray. For non-ERISA plans if you are close to 65 with a small retirement nest egg, yes. If you are 25 with $2,000,000 in retirement savings it would likely be challenged. The money must be reasonably necessary for you and you to live on while retired. At 25 there will be time to rebuild retirement funds. $2,000,000 may be more than one reasonably needs at any age. Remember, just because you say they are retirement savings doesn't make them exempt. Even retirement annuities or certain retirement plans may not count.

Q. How about a qualified ERISA plan?
A. So long as everything was done properly true ERISA savings should be 100% exempt in bankruptcy no matter the size.

Q. What about other bankruptcy exemptions?
A. See the table of which states allow the Federal exemptions, the Federal Bankruptcy exemptions and State exemptions for those not allowing the Federal exemptions ( Alabama – Nevada , and New Hampshire – Wyoming ). Most states allowing the Federal exemptions will also allow the debtor to choose using the state exemptions if they are more favorable.

Q. Who has the right by statute to seize assets?
A. State and Federal taxing authorities.

Q. What about stocks outside of retirement accounts?
A. It may be harder for a bank to find them and get to them, but once they get close to them the creditor may grab them as if they were cash.

Q. Can a creditor get assets they don't know about?
A. Realistically no. This doesn't mean you should fraudulently dispose of assets, but you don't need to volunteer this information or make assets easily accessible unless a judge orders you to.

Q. Don't my loan documents require me to give the bank full financial statements if they ask for them?
A. Yes, by not following the terms of the loan you will be in default. I'm guessing you are already in default.

Q. Can a creditor get my spouse's assets?
A. Not if the assets are legitimately theirs and they are not a co-signer, guarantor or co-debtor.

Q. Why are these soft assets so important?
A. Four important reasons:

If you do a workout the value of your cash will increase. If a creditor will allow a buyout at 10 cents on the dollar, $1000 can eliminate a $10,000 debt.
Many workouts will require a sizable cash deposit or payoff.
Credit to borrow money during a workout or bankruptcy will be very hard to come by and many loans will require cash down payments.
If you work out a payment plan or enter into a plan of reorganization a missed payment may result in losing an asset such as your house. A cash reserve can be helpful.

Q. Now that my limited supply of cash means so much what should I do with what little I have?
A. I have written a whole article on this topic called "Who to pay when you can't pay everyone".

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