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dylatess
dylatess, Attorney
Category: Bankruptcy Law
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Experience:  37 plus years of experience specializing in bankruptcy law
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I have five specific bankruptcy questions: 1. If I file

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I have five specific bankruptcy questions:

1. If I file for joint bankruptcy with my wife, does the Colorado Homestead exemption allow me to double the exemption (2x$60,000=$120,000)?
2. If I keep the home sale proceeds are kept in a separate banking account (not co-mingled with other funds), are they protected under bankruptcy for two years from the date of the home sale?
3. If I set up an "S" corporation using my 401(K) retirement funds (Business Owners Retirement Savings Account) to start a business and purchase $20,000 worth of business related equipment prior to filing for bankruptcy, will my 401(K) retirement funds still be protected as an exemption under bankruptcy?
4. Will the $20,000 in equipment also be protected as an exemption under Colorado bankruptcy law?
5. Are there any other special requirements to actually see revenue through the new corporation to qualify for the exemptions under bankruptcy? I am working with a financial institution to ensure that I meet the "S" Corporation requirements to utilize my 401(K) to start up a new business.

Thanks.

Terry

Over 34 years, I have assisted my clients with debt problems having filed more than 32000 Chapter 7 and Chapter 13 Bankruptcy petitions.

 

Your questions can be answered by a yes or no. Likewise, the law is black and white for these issues. Please see below:

 

1. If I file for joint bankruptcy with my wife, does the Colorado Homestead exemption allow me to double the exemption (2x$60,000=$120,000)? NO
2. If I keep the home sale proceeds are kept in a separate banking account (not co-mingled with other funds), are they protected under bankruptcy for two years from the date of the home sale? NO
3. If I set up an "S" corporation using my 401(K) retirement funds (Business Owners Retirement Savings Account) to start a business and purchase $20,000 worth of business related equipment prior to filing for bankruptcy, will my 401(K) retirement funds still be protected as an exemption under bankruptcy? Definitely NO!
4. Will the $20,000 in equipment also be protected as an exemption under Colorado bankruptcy law? NO
5. Are there any other special requirements to actually see revenue through the new corporation to qualify for the exemptions under bankruptcy? I am working with a financial institution to ensure that I meet the "S" Corporation requirements to utilize my 401(K) to start up a new business. NO

 

If someone has advised you regarding the above, they obviously do not understand BK law or have no problem leading down the path to bankruptcy fraud. Accordingly, please find a BK attorney to meet with (most offer free consultations) so that you can get the right advice.

 

Please respect my time my rating my answer ok or better so that I am compensated. I wish you well.

 

 

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Customer: replied 3 years ago.


Thanks for the clarification. I have received conflicting advice from an accountant. I wanted to take advantage of the $20,000 business equipment exemption. Is that only for farmers? If not, could I set up a new business under an LLC prior to bankruptcy and buy $20,000 in business equipment to start my new business after bankruptcy? I certainly do not want to be accused of fraud. If you think this is a bad move, I would eliminate this strategy all together.

You are correct. As farming is a big industry in Colorado, the exemption only is limited to farmers. And yes, your accountant's advice is very bad. So please sit down with a BK attorney who can set up a good and legal plan for you. I wish you well.

 

 

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