Refund from US Dept of Justice after filing

[stray]

If you receive a refund from the Asset Forfeiture & Money Laundering Div of US dept of justice after filing BK7 is that part of the estate? It's from a business that turned out to be a Ponzi scheme and the gov't seized all of their assets. They may be offering refunds of investments to people that request it. (Step mother involved me in this, used her $, my name, ugh.)

[HHM]

Possibly, (most likely probably).

The issue comes down to dates. When did you file BK and when did your "right" to this money arise?

My sense is, this investigation and asset seizure has been going on for some time prior to your BK. As such, most likely, your right to receive the refund arose before you filed BK and therefore is potentially subject to turnover to the BK trustee. Think of it like a car accident. If you are injured in a car accident, it is the accident, itself, that gives rise to your claim for a personal injury award, even though it could take several years to get the money. If you file BK AFTER the accident but before you receive the money, that money is subject to the BK.

The only other issue would be whether (a) there is an exemption you can use to exempt the funds, or (b) whether the property is actually property of the BK estate. (item (b) is possibly a more fruitful line of inquire).

[stray]

Thanks HHM. I guess this means I have to tell dear ol dad that I filed BK. That'll give him a little lift.

They seized the business' funds/property in 2008. They will be sentencing the business owner in September and after that reviewing applications for refunds of investments. Proof of payment to the "scheme" is a check written by someone else, but she invested for me/set up an account in my name. (Didn't ask for it, didn't want it, it turned out just as I thought it would.) I guess because they are calling it a refund, I thought it might not be considered a settlement.

[HHM]

There are other issues. There might be a way to keep it out of the BK. Given the nature of the refund, it might be something that is not part of the BK estate, that is BK code section 541 issues. Your attorney would go through that section and see if this refund fits into any of the exceptions to being property of the estate.

But, based on timing, the money is probably part of the BK Estate.

Another possible argument...you said that your mother used "your name" but "her money." If that is the case, you might argue what is known as "bare legal title." I don't know if Oregon accepts that sort of argument, but the idea is that even though the account is in your name, the money is not yours and never was yours. This is the type of argument that makes it a non-issue when a bankrupt debtor is on the bank account of an elderly father or mother. The debtor has a form of "legal" title, but has no equitable title (meaning, the money in the account is not the debtor's). As such, the money is not part of the BK because it is not your money. Or, the debtor is on title to her son's car, but the son makes the payments, pays insurance, drives it daily, and other wise takes care of the car. In most states, the son would be considered the "owner" of the vehicle even though mom/debtor is on title. The result being, the car is not an asset of the BK estate.