How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask cfortunato Your Own Question
cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8023
Experience:  Bankruptcy professor.
Type Your Bankruptcy Law Question Here...
cfortunato is online now
A new question is answered every 9 seconds

Hi, c fortunato, iam back, i had another question, in regards

This answer was rated:

Hi, c fortunato, i'am back, i had another question, in regards XXXXX XXXXX Is income a factor in bankruptcy. My income consist of Social Sec, a small Pension, a part time job during the summer months ( income around $4000.00), and annuity income for a AARP policy. I am particularly worried about the annuity income. How is annuity income viewed. I used my life savings to purchase this annuity. I didn't want to risk it in the stock market. I have a checking account to pay my normal monthly bills and a small savings account with $3000.00 in it. MY DOMICILE IS FLORIDA. I am 65 and retired. My wife and i each have a car. The cars are 12yrs and 17 years old. I am very concerned for our future. i also have a prepaid funeral, could that be touched. Joe
Hi JACustomer,
Is the annuity an IRS tax-exempt or an IRS tax deferred plan?
Customer: replied 5 years ago.
Neither , it is fully taxable as ordinary income. Instead of investing in the stock market , i put my savings into this income producing immediate annuity.

Thank you for your response.

Annuities that are not IRS-qualified as tax exempt are generally not exempt (protected) from the Bankruptcy estate.

1) Have you lived in Florida continuously for the past 2 years? If not, where have you lived for the past 2 1/2 years?

2) Do you own a home?

3) If you do own a home, what is the current market value of your home?

4) If you do own a home, what is the balance on the mortgage(s) for the home?

5) How much money is in your annuity?

Customer: replied 5 years ago.
I only recently obtained my certificate of Domicile in the state of Fla. My former residence is New York State. The Fla. home is valued at $50 to $60 thousand. It is a manufactured home on rented land. It is paid for. The annuity is valued at $80,000.00, the principle is gone, invested in a immediate annuity, with now survival (beneficiary benefit ) I needed the income from the annuity. my pension is rather low.

I am not sure I understand how your annuity works. If it is valued at $80,000, how is it that the principle is gone? Where is the principle?

Customer: replied 5 years ago.
The principal is non refundable to the client , the Principle is gone, You derive a income from this type of annuity for life, no matter if you live 5 years or 35 years., unless you signed up for a survivership option , which i did not. but you principal is gone for every, you do not get it back, you trade off the cash (principle ) for the life time of income at a fixed rate., based on your gender and age at the time you purchase a annuity.

Thank you for the clarification.


If it is not possible to get at the principal, then your annuity would be safe if you filed a Bankruptcy. Additionally, the income from the annuity would be treated the same as income from employment or income from a pension.

Income becomes a factor when filing a Chapter 7 Bankruptcy only if the gross monthly income for a household of two in Florida is greater than $4,275. Social Security income is not included in this figure.

If you have lived in Florida for less than 2 years when you file a Bankruptcy, you will have to use the New York Bankruptcy exemptions, as you cannot use Florida exemptions until you have lived in Florida continuously for 2 years. New York does not provide an exemption for a pre-paid funeral, but Florida does.


I think this is what you wanted to know. If not, please let me know.

Thank you.

cfortunato and other Bankruptcy Law Specialists are ready to help you