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Terry L.
Terry L., Attorney
Category: Bankruptcy Law
Satisfied Customers: 2815
Experience:  Better Business Bureau. 18yrs bankruptcy experience. Chicago Bar Assoc. American Bankruptcy Institute member.
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I live in CT and am in process of filing bankruptcy (chapter

Customer Question

I live in CT and am in process of filing bankruptcy (chapter 7, I think, but possibly chapter 13) but haven't actually filed yet. My lawyer says the delay in filing is in determining if an anticipated restitution payment from the Holocaust Claims Conference in NYC for seized property is considered an exempt asset or not. I did not put in the claim (another family member did). I've not received any payment as yet, but was copied on a letter from the Claims Conference stating that the payment has been approved and will be made - I am not sure if it will be weeks or months before the payment is actually sent.

The restitution payment is not large (well under $30k), and I owe past-due property taxes and some student loans I'd like to pay with part of the restitution payment proceeds, but I don't want to have any leftover amount declared non-exempt and taken away by the trustee.

My lawyer tells me that although a Claims Conference restitution payment for seized property may be exempt from the 'means test' it might not be exempt from the bankruptcy trustee taking hold of said payout. My lawyer also says that there is no precedent in this situation - that nobody has ever declared bankruptcy while having a Claims Conference restitution payment for seized property as an asset.

My lawyer has said that I will have to pay for legal research to be done to determine if the restitution payment is an exempt asset or not, thus further delaying filing the bankruptcy. This matter has been dragging on since beginning of the year. Can you please help? Is there a precedent set in such matters that can be cited to eliminate further delay to the bankruptcy filing, and to show that the restitution payment is actually an exempt asset?

Thank you for your help.
Submitted: 7 years ago via Nolo Press.
Category: Bankruptcy Law
Expert:  Terry L. replied 7 years ago.
Ok, several issues. IF it turns out to be exempt, then you are fine, as long as you keep the proceeds separate from any funds you may have of your own (ie: put it in its own bank account, with nothing else)
If you co-mingle the funds, it would lose it's exemption.

If you pay the proceeds before you file to the taxing body and student loan body, then the trustee would have the power to get the funds back, and distribute to all creditors on a pro-rata basis....This is called avoiding a preferential payment (you are paying debts you want to pay, so it isn't fair to the other creditors.) Your are better off paying them after the case is over, therefore it wouldn't be an issue in the case.

Finally, the big question is if your state has an exemption available to protect this asset.

Here is the available statute:
You can choose either the state, or the federal exemptions:

1. state
Crime victims' compensation: Connecticut General Statutes 52-352b(o), 54-213

2. Federal
522(d)11) The debtor’s right to receive, or property that is traceable to—
(A) an award under a crime victim’s reparation law;

Therefore, Assuming the law you are referencing is considered a crime victim's reparation law, then it may very well be protected if you choose to use the federal bankruptcy exemptions.

This is not legal advice. I have not researched whether this restitution actually falls under this category, but if it does, then it will be exempt. So be sure to follow up with your lawyer.
Customer: replied 7 years ago.
But how do I find out if the restitution DOES fall under one of these categories, and if it does, which one?
Expert:  Terry L. replied 7 years ago.
You need to read the Holocaust Claims Conference laws for distribution, who qualifies, etc. If you were a holocaust survivor, then I would argue that the exemption would qualify.
Customer: replied 7 years ago.
I appreciate your effort but I really don't think this gets me any closer to an answer than I was before.

I was hoping an online lawyer who has dealt with or is knowledgable about this, would simply say yes (or no) it is exempt and refer to some case showing where it was similarly exempted, or identify a federal or state statute stating that restitution payments for war crimes are exempt assets. It was my grandfather's property for which the payment is being made.

My own lawyer has already said she has to do extensive research to find out if it's exempt or not, and that I have to pay for that research, because there is, according to her, no precedent. I find it hard to believe there is no precedent.
Expert:  Terry L. replied 7 years ago.
I have given you the federal bankruptcy exemption that states

2. Federal
522(d)11) The debtor’s right to receive, or property that is traceable to—
(A) an award under a crime victim’s reparation law;

Precedent relates to caselaw. I have provided you the statute for which it applies. If there is no precedent, I would argue that you are entitled.

Unfortunately, you have not cited the exact statute/law that is granting you this restitution.    if you give the exact name, I can do a quick look to see. However, I would encourage you to hire your lawyer to do the research if you fear that it might be non-exempt.
Terry L. and 2 other Bankruptcy Law Specialists are ready to help you
Customer: replied 7 years ago.
Thanks Terry, I don't know the statute/law granting the restitution -- all that I know is that a claim was put into the Claims Conference several years ago for the seized properties, and they Conference is finally making a restitution payment.
Expert:  Terry L. replied 7 years ago.
i would need to know the exact act granting the power to distribute the assets. Are you a survivor? If so, I hope that it can ease some of the pain of that atrocity. I recently visited a work camp museum on my last vacation, and was sickened by what occurred. Best of luck to you, I think you'll be fine here.