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I am in GA, I have a brokerage account with money in it to day trade as a living. Can these be exempt from seizure in Chapter 7?

Marietta, GA |

I have done this as a living for 7 years as my sole income , since I am physically unable to work a full time job elsewhere . I am wondering of part or all of this can be classified as tools of the trade , therefore exempting it from seizure . I ave no other assets , no equity in my home and have lost / sold all my belongings . I have an underwater home as well .

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Attorney answers 4

Best Answer
Posted

If you file a chapter 7, your ownership interest in the LLC will be considered an asset, subject only to the $5000 wildcard exemption. Therefore, there is a good chance the trustee would look to take anything over that. Tools of the trade would only apply to the computer, printer, etc. Since your comments to others indicated that this is not an ERISA retirement account, you would not be able to apply the retirement account exemption. However, there may some solutions you could come up with with a little pre-bankruptcy planning. You need to sit down with someone who handles more complicated cases and is willing to give you more than just a short consultation so that you can explore where you want to get and how to get there without acting in bad faith as to your creditors. Also, since you have a second mortgage, you may want to explore the possibility of a chapter 13 to strip the second mortgage and pay a dividend to unsecured creditors over time so that you do not lose the money in the account.

The above information is general in nature. In order to obtain more specific and legal advice upon which to base your important decisions, please contact our office directly for a free phone or in person consultation. Robert M. Gardner, Jr. Hicks, Massey & Gardner, LLP hmgrmg@yahoo.com 53 W. Candler St. Or 718 Oak St. Winder, Ga. 30680 Gainesville, Georgia (770) 307-4899 (770) 538-0555 gadebtlaw.com hicksmasseyandgardner.com serving metro Atlanta and all of Northeast Georgia Bankruptcy, Divorce, Personal Injury, Worker’s Compensation, Medical Malpractice, Adoption, Civil and Criminal Litigation

Posted

Cash isn't considered to be a "tool of the trade" in any state I am familiar with. Hope this perspective helps!

Posted

You cannot claim cash as a "tool of trade". You can claim up to $5600 in cash as exempt in BR. An attorney can tell you precisely how much after reviewing your case.

Posted

That is an interesting argument. Perhaps if you could show that you cannot withdraw the funds without a substantial penalty, or that the account requires a minimum balance to remain open, you might be able to protect some of the money. The Trustee stands in your position so if s/he will incur a penalty to withdraw your funds, you could argue that should not count towards the total amount of your nonexempt assets.

Set up a consultation with a local bankruptcy attorney. That person can advise you how best to protect your assets through bankruptcy.

Any legal question involves analysis of diverse and sometimes complicated issues that are rarely adequately addressed in an online Q&A so it is always in your best interests to consult a local attorney before making any decision. My answers are general in nature and should not be relied on as legal advice. If you rely on my answer, you do so at your own risk and you cannot hold me responsible for any negative outcome that may result. I am not your attorney and my response to your question does not create an attorney client relationship between us. This is free advice - take it or leave it.

Asker

Posted

The funds were put in an LLC, and yes, a minimum balance is required to have buying power. No penalties will be incurred, but I cannot trade without the required minimum. Since I have done this as a living and it has shown up on my taxes as an active day trader, I am hoping to find a precedent in GA where an individual is allowed to keep more of the account than just the cash minimum since it is my sole means of living and my only asset left. Thank you for your input. One attorney advised me in a simple consultation that no trustee would allow me to keep the cash and still file Chapter 7. It is my only hope and chance to drag myself out of debt and not lose my home, thus the reason for contemplating Chapter 7 in the first place.

Kris K. Skaar

Kris K. Skaar

Posted

I assume that your motivation in filing chapter 7 is to keep your house. However, it is my understanding that to keep your house in chapter 7, you will have to reaffirm the debt and keep up the payments. Will you be able to keep up the mortgage payments when you file for bankruptcy? If not, bankruptcy may not help you with your goal, and plus the trustee may take your day-trading LLC to divide among all your creditors.

Asker

Posted

Yes, I fought my bank for 11 months and got a modification on my mortga ge so I am now current and intend to keep my home. There is a 2nd mortgage that is not current, thus the need to file for bankruptcy, as well as unsecured cc debt. The information about the Trustee taking the LLC to divide amongst creditors is my main concern, it would render me unable to make a living as I have done for 7 years with this account. I would then lose earnings capability and lose everything for me and my family if this account is seized. ----- Original Message -----

Asker

Posted

Yes, I fought my bank for 11 months and got a modification on my mortgage so I am now current and intend to keep my home. There is a 2nd mortgage that is not current, thus the need to file for bankruptcy, as well as unsecured cc debt. The information about the Trustee taking the LLC to divide amongst creditors is my main concern, it would render me unable to make a living as I have done for 7 years with this account. I would then lose earnings capability and lose everything for me and my family if this account is seized.

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