Trusee going after stock sale 6 months before filing

[outofdebt201]

So I had my 341 meeting and the trustee kept asking me why I sold my stocks in IBM and when I sold them, and if I sold them so I wouldn’t lose them in the BK. I informed him that I sold them 6 months before I filed and that I sold them because the economy was doing bad, and people where losing their jobs. I sold the stocks and then moved them into a Roth IRA 5 days later after selling them.

My lawyer states that she has written up the paperwork to fight the trustees decision to stop the BK. But I’m not understanding really what the issue is. My lawyer stated that because I sold and moved the stocks into a ROTH IRA it shouldn’t be a problem. So why do I have to go through these? My lawyer states that the judge or other higher person will look at the paperwork with my statement on it, and if it all looks good. Then we wait 30 days for the BK to finish up and I’m all in the clear. But if they don’t decide that we could have a trail again.
Has anyone else had this issue.

[ozarkmiss]

How did he know you sold the stocks?

[outofdebt201]

It was part of the paperwork I had to give my lawyer. I was completely honest with all my finance when I filed BK.

[despritfreya]

Your turned non exempt property into exempt property - which, in and of itself may OR may not be a problem. How much are we talking about?

Des.

[outofdebt201]

I sold the stocks and then opened up the Roth IRA for $5,000.

[despritfreya]

I sold the stocks and then opened up the Roth IRA for $5,000.

I do not know if such an amount could be a problem as it relates to an argument that you improperly moved non exempt into exempt in an attempt to shelter it from your creditors. In general (at least in my district and so long as it is not an attempt to increase the homestead), moving non exempt assets into exempt should not be a problem.

Let your attorney handle this and, for now, do no lose sleep over it.

Des.

[outofdebt201]

Thank you, I was also under the understanding that because it was so long ago it wasn't a problem.

[AngelinaCat]

No, standard look-back is six months, and is not that long a period in the BK world. However, if a trustee suspects that you were trying to shield assets, they can look back a year or more. But, the more time that passes between an event such as your stock sale, and your filing BK, the lesser chance there is that something will catch the trustee's eye.

Good luck to you.

[tcreegan]

Hi outofdebt201,

So why do I have to go through these? Nothing personal, the trustee is just doing their job. They are supposed to look for non-exempt assets, if someone moves non-exempt assets to exempt just to keep it out of the creditors hands, the trustee can reverse that and get it back.

I was completely honest with all my finance when I filed BK. This is your ace-in-the-hole.....for the trustee to get it back, they have to show you moved it with the intent of "hindering or defrauding" your creditors. And you have been honest and open about it, hardly an attempt to "defraud" someone

As they say, honesty is the best policy....and it doesn't hurt to have a good attorney who has your back.....

Tom in Colo

[outofdebt201]

UPdate: So we are heading to court tomorrow. We as my lawyer, me and the trustee. Who should I prepare for these. I'm not sure what they are going to ask me? Any info would be helpful.

Thank you.