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In yesterday’s Bankruptcy in Indiana article, I used a bankruptcy case from Florida to illustrate the principle that bankruptcy law is designed to treat all parties fairly.

Because the employer had not disclosed to his key employee how much debt the company had, his false statements to her resulted in the bankruptcy court deciding that his debt to her could not be discharged through bankruptcy (and he had to pay her the money as promised)..

Since, by way of providing bankruptcy information in Indiana, I want to use these cases as teaching tools, I want to make a second point about the case of Mr. F. and his key employee Ms. E.:

There was a second way in which Mr. F. did not fulfill his obligations to Ms. E.. The employer had made an agreement that he would match employees’ contributions to their IRA accounts.  Ms. E. had contributed $4415 to her IRA account, but the money was not matched.

Since I helped write the exemptions portion of the new bankruptcy laws of Indiana, I know that retirement plan money, including IRAs like Ms. E’s account, but also 401K’s, SEP’s and 403b plans, gets special treatment under the law by being protected from the claims of creditors.

But what is particularly interesting about this case is that Mr. F did not lie to the bankruptcy court.  In fact, he did not dispute his failure to match the funds.

Still, since Mr. F. was the sole owner of the business and the only officer and director of the company, it was his fiduciary responsibility to make those contributions.  For that reason, the bankruptcy court ruled that the money he owed to Ms. E. in matching funds for her IRA could not be discharged in bankruptcy.

After close to twenty-five years as a debt consolidation lawyer and Indianapolis bankruptcy attorney, I am often called upon to teach Continuing Education classes for other attorneys, so you might say I am very familiar with the workings of the new bankruptcy laws of Indiana. But as we see in this Mr.F/Ms. E. Florida case, the court bases its decisions on what Consumer Bankruptcy News calls “the totality of the debtor’s circumstances”.

One lesson to be learned here is that it takes experience and knowledge to put together the documentation for the bankruptcy court in a way that reflects that totality of the debtor’s circumstances.  This is one of those times when having an experienced legal advisor can make a world of difference.

Similar Posts:

• Will Filing Chapter 7 Bankruptcy Wipe Out My Retirement Savings?
• How to add savings to your retirement plan with Roth IRA
• Bankruptcy in Indiana: Some Debt Just Can’t Be Discharged
• Another Indiana Bankruptcy Lawyer Case Lesson: When Divorce and Bankruptcy Mix
• Who Will Know About My Bankruptcy?