BANKRUPTCY CASE LAW:
RETIREMENT ACCOUNTS AND BANKRUPTCY
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In re SCOTT LEE EGEBJERG, 574 F.3d 1045 (9th Cir., Aug. 3, 2009), page 147 (case no. 08-55301) The Ninth Circuit Court of Appeals has issued an opinion amending and superseding In re Egebjerg, 2009 WL 1492138, Bankr. L. Rep. ¶ 81,498 (9th Cir., May 29, 2009), although the new opinion does not change the outcome. The Ninth Circuit held that a debtor's obligation to repay a loan from his or her retirement account is not a "debt" under the Bankruptcy Code, and thus is not a secured debt; that the repayment obligation not an "other necessary expense"; and that the repayment obligation is not a special circumstance, although there may be situations in which the debtor's underlying reason
Cunning v. Rucker,
No. 08-55652
U.S. 9th Circuit Court of Appeals, June 26, 2009
In an appeal from the Bankruptcy Court's order denying an
exemption for Debtor's assets in pension and 401(k) plans,
the order is affirmed, where the retirement plans were not
designed and used primarily for retirement purposes.
Facing a civil judgment
debt of more than $6.5 million, Lloyd Myles Rucker declared
bankruptcy and tried to exempt his assets as belonging to
private retirement plans under California Civil Procedure
Code (“CPC”) § 704.115. Rucker had previously placed the
assets in pension and 401(k) plans funded by his wholly
owned corporations. The bankruptcy court denied the
exemption on the explicit ground that Rucker’s retirement
plans were not designed and used primarily for retirement
purposes. The district court reversed, but 9th
Circuit upheld bankruptcy court.
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