Motion to Invalidate Exemption for Injury Annuity Invalidated by Trustee

The United States Bankruptcy Court for the District of New Jersey in the case of In the Matter of Russo, denied a bankruptcy trustee's motion to invalidate an exemption on a debtor's bankruptcy petition for an annuity that was established after the debtor received a judgment following a serious car accident . Over twenty five years ago, the debtor in this case was involved in a car accident which resulted in him suffering multiple severe and permanent injuries. The defendants in the car accident case established an annuity for the debtor as a means of settling the personal injury litigation. In November of 2011, over two and half decades later, the debtor filed for bankruptcy. In his petition the debtor listed an "accident related annuity, not accessible until 2019" with a value of $140,000 as an asset. The debtor listed this asset as exempt pursuant to 11 U.S.C. 522(d)(11)(E) as an "accident related" annuity. The debtor claimed that the annuity was created to compensate him for lost future wages that resulted from the injuries he suffered in the accident. The bankruptcy trustee requested more documents relating to the annuity and the parties entered into a consent order to extend the deadline for which the trustee had to file an objection. Months went by, the deadline passed, and no subsequent consent orders were signed. On February 25, 2013, the trustee filed a motion to liquidate the annuity and invalidate the exemption because he believed that the exemption was improper. The Bankruptcy Court denied the trustee's motion on the ground that it was not filed in a timely manner. The trustee subsequently filed a motion for reconsideration, asserting that the debtor and his attorneys deceptively feigned cooperation in determining the basis for the annuity for several months. The court denied the trustee's motion for reconsideration because it agreed that he did not file an objection in a timely manner. Bankruptcy is a simple matter but involves substantial technicalities which can leave you with or without the means to support yourself in the future with exempt assets. Due to the technicalities involved, it is critical you have experienced legal counsel to assist you in the preparation and filing of your bankruptcy petition. For more information regarding exemptions, retaining assets, filing for bankruptcy, foreclosure or any other consumer debt issues visit TheNJBankruptcyAttorney.com. This blog is for informational purposes only and not intended to replace the advice of an attorney.