Bizzare new question may face Massachusetts bankruptcy debtors

questionI watched about an hour’s worth of “section 341” meetings recently, and was surprised to hear the trustee asking a question I don’t think I’ve heard before.

The trustee showed the debtors their Schedule C, and then asked:

“Have you purchased any of these assets within one year of filing the bankruptcy case?

That’s a little weird, because its not against the bankruptcy code — or any other law I know of — to buy ordinary things before filing a case. Luxury goods, yes, there is a ban on stocking up on those, but it would be tough to imagine someone not buying any thing at all for a year (even though everyone I heard get asked this answered “no”).

My best guess is that this particular trustee might be trying to flush out if debtors are engaging in bankruptcy planning — a practice that itself is not exactly illegal, although it is not beyond being questioned in the courts.

A typical example of bankruptcy planning: a 40 year old single debtor (call him Doug) has $8,000 in a bank account bit no car to get to work. The Massachusetts bankruptcy exemptions for a bank account are $2,500 and for a car are $7,500. So he takes $6,000 to buy a used car, and now falls within the limits for both categories.

I don’t know if this annoying new question is something that is going to spread statewide, or is just confined for now to a particular trustee in Worcester. But if I hear it from anyone else, I’ll post it here.

 

By Doug Beaton

This entry was posted in Chapter 7, Practical tips. Bookmark the permalink. Comments are closed, but you can leave a trackback: Trackback URL.