Bankruptcy question: RE: keeping my DVC

[marmalade]

I thought bankruptcy rules were tighter now where a filer's income had to be under a certain amount to file, but the rules vary by state. We sued an attorney for legal malpractice and won a hefty amount in court following a week-long jury trial (almost 1/2 million dollars), but the attorney then turned around and filed bankruptcy to avoid paying. She was able to keep her $350k home, all of her vehicles, a large camper/travel trailer, etc... She's taken trips to Hawaii since the bankruptcy.

I didn't think this kind of stuff was allowed anymore, but apparently it is.

WOW! I can't believe this is allowed.

 

[starry_solo]

I thought bankruptcy rules were tighter now where a filer's income had to be under a certain amount to file, but the rules vary by state. We sued an attorney for legal malpractice and won a hefty amount in court following a week-long jury trial (almost 1/2 million dollars), but the attorney then turned around and filed bankruptcy to avoid paying. She was able to keep her $350k home, all of her vehicles, a large camper/travel trailer, etc... She's taken trips to Hawaii since the bankruptcy.

I didn't think this kind of stuff was allowed anymore, but apparently it is.

Bankruptcy is governed by federal law, not state law, so rules shouldn't vary by state...unless there was a fraud finding by the court/jury, most judgments are dischargeable by bankruptcy.

 

[DisneyCowgirl]

Bankruptcy is governed by federal law, not state law, so rules shouldn't vary by state.

This is not entirely true. A lot is left up to state law, and what property one might be able to keep is one area that is left to the states. The rules vary pretty widely.

 

[CarolJ]

I would advise you to contact a bankruptcy attorney- all of them give free consultations. The DVC is an asset and it would be perjury not to list it on the bankruptcy petition. Once you file, the bankruptcy trustee would then step into your shoes and be allowed to sell it any manner he/she sees fit. The money would go to the creditors and the trustee would get a small percentage.

There are state and federal exemptions that allow a person to keep certain property. Usually you can keep your house and car if you do not have too much equity. People can keep their trailers, timeshares, etc. if they have loans on the items and there is no equity. People often think that people get to keep luxury items in bankruptcy, but it is usually the items with loans on them that they are keeping. They are liabilities, not assets. Otherwise, I cannot imagine a trustee not taking the items and using the proceeds to pay off the creditors.

 

[carebee21]

I thought bankruptcy rules were tighter now where a filer's income had to be under a certain amount to file, but the rules vary by state. We sued an attorney for legal malpractice and won a hefty amount in court following a week-long jury trial (almost 1/2 million dollars), but the attorney then turned around and filed bankruptcy to avoid paying. She was able to keep her $350k home, all of her vehicles, a large camper/travel trailer, etc... She's taken trips to Hawaii since the bankruptcy.

I didn't think this kind of stuff was allowed anymore, but apparently it is.

Hmm... Something's off with this story. In order to be a licensed attorney, you have to carry a certain amount of liability insurance, in case of lawsuits against you, much in the same way a dr. does. The amount you have to carry changes from state to state, but every state requires it. That liability insurance would have paid off a certain amount of the judgement. Did she not have that?

And secondly, I have a feeling the attorney was probably LLC'd. Most self-employeed people who in any way run the risk of getting sued for any reason are LLC'd. That way if she gets sued while acting in the capacity of her job, you can only sue the LLC, not her personally. That protects her assets and you can only go after any assets the LLC has, which is usually nothing. The LLC files bankruptcy, you get nothing and she just applies for a new LLC.

 

[rock_doctor]

Couple of questions with regard to this proposal.

1. Wouldn't Disney definitely exercise ROFR on a sale of $1?
2. And wouldn't a bankrupcy court see right thru this action as an attempt to hide assets?

probably x2

But when there is a will there is a way.

 

[IDoDis]

Hmm... Something's off with this story. In order to be a licensed attorney, you have to carry a certain amount of liability insurance, in case of lawsuits against you, much in the same way a dr. does. The amount you have to carry changes from state to state, but every state requires it. That liability insurance would have paid off a certain amount of the judgement. Did she not have that?

And secondly, I have a feeling the attorney was probably LLC'd. Most self-employeed people who in any way run the risk of getting sued for any reason are LLC'd. That way if she gets sued while acting in the capacity of her job, you can only sue the LLC, not her personally. That protects her assets and you can only go after any assets the LLC has, which is usually nothing. The LLC files bankruptcy, you get nothing and she just applies for a new LLC.

The attorney had let her malpractice insurance lapse. Actually she blamed the lapse on her deceased husband and co-owner of their law practice for not paying the insurance. It was all over a will that she wrote and was totally botched up -- big time! It took over 2 years to settle in probate and then another 3 years with the lawsuit and week-long jury trial.

You are right that she was LLC'd, but the books were so messed up and the funds were not kept separate. Client checks were deposited right in their personal accounts. It was a mess! In court she then testified that her paralegal crashed her computer with all of their records on it and therefore she had no billing records at all to bring to court. I could go on and on.

The bankruptcy was a personal bankruptcy though. She got to keep everything. We challenged the bankruptcy and lost. The laws still stink for those who are owed money.

 

[livie1205]

Bankruptcy is governed by federal law, not state law, so rules shouldn't vary by state...unless there was a fraud finding by the court/jury, most judgments are dischargeable by bankruptcy.

nope,we live in Florida and a few yrs ago DH ex wife turned in a car that SHE got in divorce and was ordered to remove dh name from but she didnt then turned it in...the bank sued them both for 16,000 but dh filed a contempt because she was ordered to remove name so he got a judgement for 16,000 plus atty fees....
The next day she filed chapter 7!! so bank came after us for the money,we ended up paying the bank (smaller amount) and being released from lawsuit but they still couldnt go after her because she filed! He ALSO was paying 100.00 extra child support to cover payments to bank and never went back to reduce it (wasnt worth the fight) so he is still paying the extra AND she got away scott free! she also just got a home loan and run up more credit cards,just a matter of time before she is in over her head again.

 

[Gr8dan2]

Practiced in the U.S. Bankruptcy Courts for many years. PLEASE CONSULT AN ATTORNEY THAT HAS A BANKRUPTCY FOCUSED PRACTICE.

The number of pieces of advice I see in the above string that are incorrect and in a few cases, a violation of law if you follow them, is astonishing.

Just for example, you will wind up with a mess if you transfer an asset for $1 to a relative before filing a bankruptcy so that you don't have to list it or include it--it's called a fraudulent conveyance, which should give you an idea of how that would be looked upon. You also cannot choose not to list certain items, debts or assets. You must fully disclose! One of the first questions you will be asked by a Trustee in your Meeting of Creditors is whether you've listed EVERY asset and EVERY debt that you have.

Please, do yourself a favor and contact an attorney that focuses on Bankrutpcy filings, almost all will give a free consult. If you don't like them or are uncomfortable, schedule a consult with another one. But don't rely on advice from a non-attorney in this situation. you can really screw yourself up.

 

[Disney-Kim]

Bankruptcy is governed by federal law, not state law, so rules shouldn't vary by state...unless there was a fraud finding by the court/jury, most judgments are dischargeable by bankruptcy.

it is all guided by the State as far as what is allowed for deductions, etc. Each state has different rules on income, deductions, and exemptions.

 

[SalandJeff]

I agree with everyone that you should contact an attorney ASAP.

However, to answer your question about ROFR, if you had a buyer and Disney exercised their ROFR, they would pay you the amount the buyer was supposed to pay.

 

[Acklander]

Just out of curiosity, why wouldn't it be considered an asset? True, it includes a financial obligation, and it may be worth less than the OP paid for it, but wouldn't the same be true of a condo, for example, that includes owner's association fees?

No idea why. I don't work with bankruptcy itself so not sure on the legalities behind it, however I do work in the financial field and have seen the end result of other peoples bankruptcies and in the paperwork that was filed, the ones that owned timeshare kept Their timeshares. My guess would be because with DVC you don't actually own it, but are leasing it from Disney with a definite end time?? Or maybe because it doesn't have much of a resale value. I don't know the reason why, but I've seen at least a half dozen examples where the people who filed bankruptcy kept their timeshare. So, if the OP is interested in keeping it, she should let her lawyer know and he can fill out the paperwork accordingly.

 

[punkin]

No idea why. I don't work with bankruptcy itself so not sure on the legalities behind it, however I do work in the financial field and have seen the end result of other peoples bankruptcies and in the paperwork that was filed, the ones that owned timeshare kept Their timeshares. My guess would be because with DVC you don't actually own it, but are leasing it from Disney with a definite end time?? Or maybe because it doesn't have much of a resale value. I don't know the reason why, but I've seen at least a half dozen examples where the people who filed bankruptcy kept their timeshare. So, if the OP is interested in keeping it, she should let her lawyer know and he can fill out the paperwork accordingly.

I think it's because most timeshares have a value so low, you can't even give them away!

DVC may be different because it does have some resale value, but I wonder if bankruptcy trustees just see "timeshare" and "know" it has little to no value.

Anyway, an attorney should really be consulted before filing bankruptcy.

 

[aclov]

I had a friend who claim bankrupty (ch 7) due to spouse unemployment and she owned the DVC Key West...It was paid off way before the bankrupty and all she had to do is pay yearly maint. fees.

She kept the DVC since it not a debt and did not had to report it.

I also know someone that filed Chap 13 due to spouse being unemployed. They kept the house, car and DVC, it was paid off and believe they also didn't report it as it was irrevelant to the filing. I don't know if it was because it was 13 and in essence paying some of that debt back. They did rent it out for a couple of years since they couldn't afford to go.

 

[lizabu]

Practiced in the U.S. Bankruptcy Courts for many years. PLEASE CONSULT AN ATTORNEY THAT HAS A BANKRUPTCY FOCUSED PRACTICE.

The number of pieces of advice I see in the above string that are incorrect and in a few cases, a violation of law if you follow them, is astonishing.

Just for example, you will wind up with a mess if you transfer an asset for $1 to a relative before filing a bankruptcy so that you don't have to list it or include it--it's called a fraudulent conveyance, which should give you an idea of how that would be looked upon. You also cannot choose not to list certain items, debts or assets. You must fully disclose! One of the first questions you will be asked by a Trustee in your Meeting of Creditors is whether you've listed EVERY asset and EVERY debt that you have.

Please, do yourself a favor and contact an attorney that focuses on Bankrutpcy filings, almost all will give a free consult. If you don't like them or are uncomfortable, schedule a consult with another one. But don't rely on advice from a non-attorney in this situation. you can really screw yourself up.

I agree. Some of the advice in this thread if followed could get you in a lot of trouble. Just see a specialist and put all your cards on the table. They can explain your options to you.