If your retirement plan is qualified under the Federal Employee Retirement Income and Security Act (ERISA), your ownership in the plan is exempt. No third party is able to get to retirement funds held in ERISA qualified plans. This makes an ERISA qualified plan an excellent asset protection technique.

Before bankruptcy:

You can take a cash advance on a credit card to pay your living expenses or your attorney if its more than 60 days prior to filing or less than 60 days if it is under the amount of $1075.

when the bankruptcy reform iss enacted, this will be chagned to 90 days and $750

you can make your annual contribution to your IRA if you have one, or if you have any other exempt pension plans.

Keep in mind that if you do file for bankruptcy, all of your transactions. within the last year prior to filing will be subject to inquiry by the bankruptcy trustee, and if found to be made to perpetrate a fraud on your creditors, they could be reversed.

The bankruptcy trustee has the power to do asset. searches for real property and bank accounts, check for unclaimed. cars with the Department of Motor Vehicles, make random asset checks, obtain your bank statements and canceled checks, and get your tax returns from the IRS to verify statemetns made on your petition regarding your income and property.

possible red flags:

- Debts incurred for luxuries such as jewelry, vacations, and hobbies within 40 days before fliing.

- Cash advances over $1,000 within 20 days of filing. These will be presumed to be nondischargeable. Last minute buying sprees can taint your entire case with a suspicion of fraud. If you have taken cash advances, wait three months before you file.

Proposed Law on Bankruptcy Has Loophole
By GRETCHEN MORGENSON

Published: March 2, 2005

The bankruptcy legislation being debated by the Senate is intended to make it harder for people to walk away from their credit card and other debts. But legal specialists say the proposed law leaves open an increasingly popular loophole that lets wealthy people protect substantial assets from creditors even after filing for bankruptcy.
 
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The loophole involves the use of so-called asset protection trusts. For years, wealthy people looking to keep their money out of the reach of domestic creditors have set up these trusts offshore. But since 1997, lawmakers in five states - Alaska, Delaware, Nevada, Rhode Island and Utah - have passed legislation exempting assets held domestically in such trusts from the federal bankruptcy code. People who want to establish trusts do not have to reside the five states; they need only set their trust up through an institution in one of them.

"If the bankruptcy legislation currently being rushed through the Senate gets enacted, debtors won't need to buy houses in Florida or Texas to keep their millions," said Elena Marty-Nelson, a law professor at Nova Southeastern University in Fort Lauderdale, Fla., referring to generous homestead exemptions in those states. "The millionaire's loophole that is the result of these trusts needs to be closed."

Yesterday in Washington, Republicans in the Senate beat back the first in a series of Democratic amendments aimed at softening the effects of the bankruptcy bill on military personnel, and the majority leader of the House vowed to get quick approval of the bill if the Senate did not significantly alter it.

"We will grab hold of it just like we did class action if it is a good and clean bankruptcy reform bill," said Representative Tom DeLay, a Texas Republican, referring to the quick action the House took last month on a measure limiting class-action lawsuits.

The Senate bill is favored by banks, credit card companies and retailers, who say it is now too easy for consumers to erase their debts through bankruptcy.

It is almost identical to previous versions that have been introduced in Congress, unsuccessfully, since 1998. Perhaps because the current bill was written so long ago, some legal authorities say, it does not address the new state laws that have allowed asset protection trusts to flourish.

"This is just a way for rich folks to be able to slip through the noose on bankruptcy, and, of course, the double irony here is that the proponents of this bill keep pressing it as designed to eliminate abuse," said Elizabeth Warren, a law professor at Harvard Law School. "Yet when provisions that permit real abuse by rich people are pointed out, the bill's proponents look the other way."