Author Topic: Debtor has Exempt money income only  (Read 344 times)

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Dollar short

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Debtor has Exempt money income only
« on: April 05, 2018 04:43:51 PM »
If the only income a debtor has, is from social security and qualified pensions, would a creditor be able to repossess the vehicle that was purchased with exempt money? Also would giving exempt money to another family member be considered a fraudulent transfer? Any insight will be appreciated.

CleaningUp

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Re: Debtor has Exempt money income only
« Reply #1 on: April 05, 2018 05:06:44 PM »
Yes.  A creditor can repossess a vehicle that was purchased with exempt money.  Whether he actually will depends on such things as state exemptions, the costs of the repossession, and the residual proceeds from the sale.  If there is not enough money after all of those have played through the equation, they aren't going to do it because they aren't going to get any money out of the time and money the have to spend to get it.

Social Security funds deposited in a checking or savings account are protected to the level of several months worth of deposits.  After that time period, any accumulated payouts become attachable. 

Exempt retirement funds, themselves, are protected from attachment; the distributions, however, may not be to the extent of the exemptions allowed by state law.

As for transferring exempt funds, that is prohibited through the anti-alienation clauses that form the stuctures of exempt retirement funds.  The reasoning is basically that the funds are for YOUR support, not someone else's.  I'm not sure that there is any penalty greater than losing the exempt protection for transferring the accounts, and you may loose the rights to some of the matching contributions that an employer has made.  But I doubt that it would be considered fraudulent transfer to pass the corpus along to someone else, just as the residual of a retirement account would legally pass along to heirs after your demise.

Dollar short

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Re: Debtor has Exempt money income only
« Reply #2 on: April 05, 2018 05:31:23 PM »
Thanks so much for the information. I am in Florida. Looks like I will have a
lot of cash on hand.

Dollar short

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Re: Debtor has Exempt money income only
« Reply #3 on: April 05, 2018 05:34:19 PM »
Also, looks like I will be paying my son rent.