Should a debtor “cash out” non-exempt assets and purchase exempt assets prior to filing bankruptcy?
This is commonly referred to as “exemption planning” and it is acceptable, up to a point. Unfortunately this “point” is somewhat ill-defined. If you go too far your entire bankruptcy can be jeopardized. The most widely cited case on this issue stated the standard to be: “when a pig becomes a hog, it gets slaughtered”. Not a very precise standard, to say the least.
Related Questions
- If a creditor has obtained a judgment against the debtor prior to his filing, does that mean the judgment will survive the bankruptcy?
- Should a debtor sell or cashout nonexempt assets and purchase exempt assets prior to a bankruptcy?
- Should a debtor sell non-exempt assets in order to purchase exempt assets prior to a bankruptcy?
