"If
it's worth striving for,
it's worth protecting"
June
15, 2005
By
Rober Lambert
President, Asset Protection
Corporation
Dear
Newsletter Subscriber:
The "fresh
start" available in a chapter 7 bankruptcy is soon to go the way of the Dodo Bird.
It’s back to a debtor
prison mentality. Congress
has caved in to the
interests of the credit
card companies and
the hard working American
is the victim. Further,
certain new provisions
in the Bankruptcy Law
make a bankruptcy a
bad alternative for
anybody who has recently
completed the implementation
of a solid asset protection
plan.
The
key issues:
DEATH
OF THE FRESH START
This
makes me sick to my
stomach! The bottom
line is that anybody
who makes more than
the median income level
in his community (and
this means anybody
who works) cannot discharge
his debts. Instead,
he has to enter into
a five year long program
where almost every
penny he makes is paid
to his creditors. There
is no fresh start -
just five years of
continued torture.
I wonder if hard working
people contemplating
bankruptcy would be
better off not working
for a year and going
on the dole just to
be able to avail themselves
of the fresh start.
Again, we see congress
rewarding mediocrity.
DEATH
OF THE HOMESTEAD EXEMPTION
The
wonderful homestead
exemptions offered
by several states such
as Florida and Texas
no longer work if a
person files for bankruptcy
protection within 40
months of purchasing
the home. This is going
to put the squeeze
on a number of new
Florida residents.
The only good thing
is that the homestead
exemption is only rendered
ineffective in a bankruptcy
court. A besieged creditor
does have the option
to defer filing bankruptcy.
ASSET
PROTECTION AND BANKRUPTCY:
OIL AND WATER
In
the "old days" many folks with solid old and cold asset protection plans successfully completed
chapter 7 bankruptcies.
Well, this is not an
option any further
unless the formation
and funding of the
plan occurred well
over 10 years ago.
The new law has significant
provisions which give
the bankruptcy court
power to undo almost
any asset protection
planning unless it
is more than 10 years
old. This creates some
serious issues.
First,
will the bankruptcy
court actually have
the capacity to undo
a solidly done plan?
The answer is probably
not because the assets
will be out of the
country. This will
create some very serious
issues because the
only thing more dangerous
than a woman scorned
is a bankruptcy judge
frustrated. The last
guy who messed with
a bankruptcy judge,
Mr. Lawrence, is still
in jail (note, he should
be in that he funded
his trust with a clear
fraudulent conveyance!).
Second,
is bankruptcy eliminated
as an option for an
honest decent person
who does asset protection
planning when the financial
seas are calm and then
has a financial disaster.
This is the person
the fresh start was
supposed to help. It
is my opinion that
bankruptcy is unlikely
to be a viable option
for him. In an effort
to shore up collections
of their 22% credit
card loans the finance
companies have completely
hosed the normal hard
working American.
I
do not think that bankruptcy
and asset protection
mix. That has lways
been the case; however,
it is even more so
now.
Fortunately,
solid planning done
when the financial
seas are calm is so
very powerful and effective
that bankruptcy is
almost never even contemplated
or necessary for somebody
with a solid plan.
Well,
that's about it for
now. Talk next week.
Rob
If
you would like more
information regarding
asset protection, trusts,
family limited partnerships
or the subject of this
article please call
or email our office.
