This is turning into a nightmare

[bjbdlb]

In December, I was forced to sell part of my IRA, to conform with the IRS requirements. The IRA is an investment that has been frozen since 2008 and I can only sell at a huge loss on the secondary market. Now, I have too much money in the bank, but need the money to pay the bills I have no choice but to pay. Luxuries like electricity and water. My atty has advised me to use the funds for living expenses before filing, or else the trustee will take the money. After I do this, however, I will have no money and not enough to live off of. Can't take from the IRA during this time and can't have money going into it

Bankruptcy is not optional, it is mandatory as there is absolutely no way out of the debt. This debt is largely due to the freezing of the IRA. I am beside myself at this point, as from what I can tell, bankruptcy will discharge my debts, but in the meantime I will be completely destroyed, unable to even pay utilities or buy food.

[AngelinaCatHub]

By it's very name, the definition of bankruptcy is that you have no money. I'm not sure how and why an IRA, a retirement fund, is frozen by IRS???

You said it is frozen, yet your lawyer said use it for expenses? The IRA cannot be taken by the Trustee as it is exempt so there is more to this than I/we understand. Could you clear this up with a better explanation?

Welcome to our Family. 'Hub

[AngelinaCatHub]

In December, I was forced to sell part of my IRA, to conform with the IRS requirements. The IRA is an investment that has been frozen since 2008 and I can only sell at a huge loss on the secondary market. Now, I have too much money in the bank, but need the money to pay the bills I have no choice but to pay. Luxuries like electricity and water. My atty has advised me to use the funds for living expenses before filing, or else the trustee will take the money. After I do this, however, I will have no money and not enough to live off of. Can't take from the IRA during this time and can't have money going into it If you cannot live without the IRA but you could have money to put into it if you could, where is THAT money coming from?

Bankruptcy is not optional, it is mandatory as there is absolutely no way out of the debt. This debt is largely due to the freezing of the IRA. I am beside myself at this point, as from what I can tell, bankruptcy will discharge my debts, but in the meantime I will be completely destroyed, unable to even pay utilities or buy food.

Again, how would you put into IRA yet cannot buy food? Confused. 'Hub

[HHM]

Sounds like the money "in the IRA" was invested in something, and that something is frozen (private security or something).

No real solution here, unfortunately.

Obviously, without more detail, it is hard to provide any sort of ideas.

Why not file chapter 13 BK, the trustee will not take the funds...but whether that works depends on how much cash we are talking about. (but if the cash is your only way to pay bills, that means you have no regular source of income, and therefore couldn't file chap 13).

I guess, try and get a job.

[despritfreya]

Regardless of how this mess came about the point of fact is that OP must spend the $$ as advised by his attny. If he doesn't he will not have the use of it anyway as he will have to turn the funds over to the Trustee.

Des.

[LadyInTheRed]

How about buying a freezer and filling it with food? Make it a cheap freezer that you'll be able to exempt. Fill the pantry too. Did you ask your attorney for suggestions on how to spend the money?

[jst4f]

We too had money to spend before BK7 and we cleared each major purchase with our lawyer before we did it. While it is scary before you file, it does get better once you are out from under all that debt. Best of luck

[bjbdlb]

I am in my eighties and retired, and cannot work. Physical limitations would make me unable to perform anything. I cannot stand long, my hearing is horrible... Due to gross malpractice by my former financial advisor, (now deceased,) all my funds are in an IRA, which is protected from bankruptcy. The investment is in a REIT, which I never should have been invested in in the first place. Trading on the REIT was frozen in 2008. Thus began the spiral leading to bankruptcy.

The income I receive from SS and the little dividend income I have do not meet my basic expenses and I have only been getting by by selling personnal possessions and selling some of my IRA on the secondary market at a huge loss. The IRS requires me to withdraw a certain amount annually, which at a 40 percent loss from selling on the secondary market, is the only reason I have any cash in the bank. Now, I have to lose this money or use it. People are not hearing about how devastating this economy has been on Seniors such as myself, for whom there is no chance for recovery.

[keepsmiling]

Sounds like you may be collection proof? Have you spoken to more than one atty?
What is your exemption status?
BK is NOT the solution for everyone. I'd inquire as to other options. Does it matter if they put a lien on your house at this point?

[despritfreya]

I agree with keepsmiling. It sounds like you are judgment proof. The IRA is exempt. Social Security is exempt. What do you have that a creditor can take? If there is no way to collect on a judgment who cares if the creditor gets one? Bk may not be the answer. Doing nothing maybe.

Des.

[mountanddo]

Have you looked into what income level qualifies for utility and food assistance. There may be an option once your IRA is gone to get this assistance. It might be worth looking into.

[AngelinaCatHub]

I am in my eighties and retired, and cannot work. Physical limitations would make me unable to perform anything. I cannot stand long, my hearing is horrible... Due to gross malpractice by my former financial advisor, (now deceased,) all my funds are in an IRA, which is protected from bankruptcy. The investment is in a REIT, which I never should have been invested in in the first place. Trading on the REIT was frozen in 2008. Thus began the spiral leading to bankruptcy.

The income I receive from SS and the little dividend income I have do not meet my basic expenses and I have only been getting by by selling personnal possessions and selling some of my IRA on the secondary market at a huge loss. The IRS requires me to withdraw a certain amount annually, which at a 40 percent loss from selling on the secondary market, is the only reason I have any cash in the bank. Now, I have to lose this money or use it. People are not hearing about how devastating this economy has been on Seniors such as myself, for whom there is no chance for recovery.

Thank you for your clarification. I assume REIT means Real Estate Investment Trust? I understanding losing @zz in real estate. But what and how is it frozen? Is there some sort of government investigation on this? In the event it become not frozen can you live off of this or is there too little in it due to the economy.

I truly understand your feelings about we seniors who have lost our retirement. We have due to ignorance and errors before and during our bk. After SS fails (probably this year) then what do we do? I guess the only thing we can do is do the right thing in the voting booth this November. 'Hub

[rrockinggramma]

ask your attorney about gift cards. can you get grocery and gas ones before you file and have them to get you through? And as an 80 year old, sounds like there is nothing to collect. However I understand wanting to be debt free so when you time comes, you can not leave your children and grandchildren paying off your debt. Is a reverse mortgage possible?

[despritfreya]

ask your attorney about gift cards. can you get grocery and gas ones before you file and have them to get you through?

Don't know about Florida but can tell you this probably will not work in Arizona. . .

In re Gietl (2011) - Trustee objected to the exemption claimed by debtor for a Frys Gift Certificate (same as a gift card). Judge sustained the objection and directed the turnover of the gift certificate:

"Exemption statutes in Arizona are to be liberally construed. . . Debtors argue, therefore, that the “actually provided” language of A.R.S. § 33-1124 should be read broadly to permit the Debtors to exempt the Gift Certificate so long as Debtors actually use the Gift Certificate to buy food and fuel for the six months following the petition date.

The Trustee counters that “actually provided” language of the statute limits the exemption to the food and fuel Debtors had on hand as of the petition date.

The Trustee’s argument is supported by both case law and treatise. See Anne E. Melley, Property & Rights Exempt, 31 Am. Jur. 2nd Exemptions § 159 (May 2009). (“The exemptions for both food and fuel available in some jurisdictions apply only to provisions and fuel in kind. Under such provisions, a debtor may not exempt cash equal to the value of the exemption.”) See also In re Hellman, 474 F. Supp. 348 (D. Colo. 1979); In re Hogg, 76 B.R. 753 (Bankr. D. S.D. 1987).

However, unlike many other jurisdictions, A.R.S. § 33-1124 does not include language specifying that the food and fuel exemption must be “in kind” or place a dollar limit on the exemption. For example, N.D. Cent. Code § 28-22-02(6 (2009), “by its terms, limits food and fuel exemptions to an “in kind in specie exemption.” In re Janz, 74 B.R. 32, 33 (Bankr. D. N.D. 1987).

Similarly, S.D. Codified Laws § 43-45-2(6), the statute at issue in In re Hogg, the principal case cited by the Trustee in support of her argument, exempts “provisions . . . for one year’s supply, either provided or growing, or both, and fuel necessary for one year.”

The Hogg court found that the language of the statute “clearly” suggested that the food and fuel had to be in hand and not just cash earmarked to purchase the provisions.

While the Debtors argue that cases from other bankruptcy jurisdictions are not binding on this court and are wrongly decided, they have not cited a single case from Arizona or elsewhere that supports their interpretation of Arizona’s food and fuel exemption.

To read the statute as broadly as Debtors urge would potentially require a similarly broad interpretation of all the household furniture and appliance exemptions contained in A.R.S. § 33-1123. If a debtor can earmark funds for future acquisition of food and fuel, then why not couches or refrigerators?

For the reasons set forth above, Debtors may not claim the Gift Certificate as exempt and must promptly turn it over to the Trustee. A separate order consistent with this decision will be entered this date."

__________________________

So, the issue of the gift card may turn on the allowed exemption.

Des.

[LadyInTheRed]

However I understand wanting to be debt free so when you time comes, you can not leave your children and grandchildren paying off your debt. Is a reverse mortgage possible?

Our debt dies with us. The creditors can go after our assets, but children and grandchildren would have no liability for the debt except maybe up to the value of assets they inherit.