The 8th Circuit Court of Appeals has affirmed a Bankruptcy Appellate Panel’s opinion regarding whether a retirement account awarded to a spouse in a divorce case is exempt in a bankruptcy proceeding.
Last year the BAP court ruled that a retirement account awarded in a divorce case was not earned by the debtor and was
The 8th Circuit Bankruptcy Appellate Panel has issued a new opinion that is really causing a lot of anxiety and uncertainty about the exemption status in bankruptcy cases of retirement accounts awarded to debtors during a divorce case.
If a debtor is awarded a portion of their ex-spouse’s retirement account in a divorce proceeding, is that account protected in bankruptcy? Until a few months ago the majority opinion was yes, but that is all changed since the BAP issued the Lerbakken opinion.
In Lerbakken, the debtor was awarded one-half of his wife’s 401(k) retirement account in a divorce proceeding. He subsequently filed Chapter 7 and the bankruptcy trustee claimed his interest in the retirement. The bankruptcy judge ruled in favor of the trustee citing the United States Supreme Court’s opinion of Clark v Rameker, a case involving inherited IRA accounts.Continue Reading Retirement Accounts & Divorce: Lerbakken Opinion Puts Accounts at Risk
Money is a complicated topic. It is often very obvious what a person must do to improve their financial situation, but getting someone to change their financial habits and attitudes is hard. Good financial advice seems to go in one ear and out the other as clients continue to repeat the same destructive patterns over
As a general rule, you are not responsible for the debts of your spouse. Also, if you marry someone you do not become obligated to pay the debts they incurred prior to the marriage.
But there is one major exception to these rules. You are liable for medical debts of your spouse under a legal
A new court opinion issued by the 8th Circuit Court of Appeals declares that alimony is part of the bankruptcy estate and can be liquidated by the Chapter 7 Trustee unless a specific state exemption protecting the alimony award exists. In re Mehlhaff, 2013 Bankr. LEXIS 944 (Bankr. D.S.D., Mar. 12, 2013).
A recent ruling by the Nebraska Bankruptcy Court underscores one of the primary differences between the treatment of divorce debts in Chapter 7 and Chapter 13 cases. (See In re Schulz, Nebraska Adversary Case #12-04070).
On August 30, 2011, the District Court for Buffalo County, Nebraska entered a divorce decree that included a division
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