Question Retired with a new debt

[Yoel]

I am retired and living only on Social Security and a soon to be annuitized Annuity currently worth about $130,000. I own no property worth speaking of.

I recently lost a lawsuit that will make me liable for about $250,000 (the judgement, lawyers fees on both sides, and credit card payments for legal fees already paid).

It is my understanding that whether or not I file bankruptcy,creditors cannot touch either my Social Security or my Annuity?

In addition,I have about $20,000 in cash. I wonder if I immediately put that cash in an IRA am I then creditor proof and do not need to file?

Thanks for your thoughts on this.

[justbroke]

You have what I call "juicy" assets which simply means that there are liquid (and/or nearly liquid) assets which "may" be an issue in bankruptcy. That means you really need to seek the professional and legal advice of a bankruptcy and/or asset protection attorney. Your annuity may or may not be exempt as State bankruptcy law may apply.

For example, many annuities are exempt in Florida, but only for annuities purchased by a Floridian and issued in Florida (F.S. 222.14). So, it really depends on the State non-bankruptcy law and/or whether you can use Federal bankruptcy exemptions.

I can't tell you how this would work in Texas, whether your annuity product exemption would be subject to a domestic requirement, or that you wouldn't have any issues. Texas may actually be "nicer" than Florida in regards to the protections. There was a case in Texas regarding a Lottery annuity (back in 2005/2006) where the winner claimed the exemption in his Chapter 13... and won.

There is no substitute, in this case, than for you to seek out a Texas attorney since this is "real'" money.

[bcohen]

Remember that outside of bankruptcy (i.e. if you don't file) there is nothing to legally stop you from hiding or concealing assets, or transferring funds from a garnishable bank account into a protected retirement account. Once you file, then you are required to disclose everything, and the trustee has the power to reverse such transfers if the funds cannot be exempted. Outside of bankruptcy, it is the judgment creditor which must do all the work (and expend all the costs) of attempting to collect on its judgment.

[jeremym51]

If you file bankruptcy then you need to disclose all your assets because if you do not show all your income sources then you might loose your authority to a discharge of your debts and along with that criminal charges could be filed and fine may also be imposed. I think you need to talk to a bankruptcy lawyer because with the help of a lawyer, you can easily know about the process of bankruptcy and you can easily decide what to do.