• Feel Crushed

    Feel Unattended

    Feel Scattered

    Not sure what to do

    Need Help

    Need Expert Advice

    CALL 1-800-966-8447

  • Bankruptcy Can

    Stop Bill Collectors
    Stop Lawsuits
    Stop Foreclosures
    Stop Bad Credit
    Stop Repossessions
    Stop Tax Garnishment
    Help With Student Loans
    Help With judgment
    Help With Past Taxes
    Help You Rebuild Credit

    CALL 1-800-966-8447

  • You are here because you need to

    File bankruptcy 7
    File bankruptcy 11
    File bankruptcy 13
    Consult what's right for you

    CALL US 1-800-966-8447

Can the Chapter 7 Trustee Take Employment Bonuses?

The short answer is maybe.   It depends on your company’s written bonus program documents.   Post-petition employment bonuses are not property of estate where it is completely discretionary; In re Lapi, 2005 WL 3199022 (Bankr. S. D. Fl.); Sharp v. Dery, 253 B.R. 204 (E. D. Mich. 2000) (same); In re Palmer, 57 B.R. 332 (Bankr. W.D. Va. 1986).  

Recently, the BAP for the U.S. Court of Appeals, Eighth Circuit, decided that employment bonuses distributed to a debtor shortly after the debtor filed for chapter 7 bankruptcy could not be considered part of her bankruptcy case.   In that case, Seaver v. Klein-Swanson, No. 12-6054 (8th Cir.BAP March 22, 2013), the debtor filed chapter 7 bankruptcy on January 19, 2009.   On the date of filing, she was eligible for both a quarterly Excellence Award bonus and an annual Growth Driven Profit Award bonus.

The key was that her employer’s bonus program documents stated that no employee earns or otherwise becomes entitled to payment, or any portion of a payment, under the GDP program prior to payment by the employer.  after the close of the calendar year for the GDP Award.  Subsequently, the Chapter 7 Trustee learned that the debtor had received $24,072.00 after the filing of bankruptcy and asked the bankruptcy court to revoke the debtor’s discharge of debts due to her failure to list the possible bonuses in her original bankruptcy papers.  The bankruptcy court granted the trustee’s request.

The debtor appealed, and the appeals court reversed the bankruptcy court on all counts.  The appeals court held that under employer’s bonus program documents, the debtor had possessed no ownership interest, whether contingent or otherwise, in either bonus, until actual payment of the bonus by the employer.  Although some employer bonus plans give the employee a vested interest in a bonus once employee goals are met, this program specifically stated otherwise.

Accordingly, the appeals court ruled that the debtor’s chapter 7 discharge should be granted, and also that she could keep all $24,072.00 in bonuses.  The court also observed that the entire litigation could have been avoided if the debtor had disclosed her contingent interest to receive the bonuses in her originally filed bankruptcy papers.

Please be aware that in cases where the bonus plan language gives the employee a vested right to payment of a bonus even before it is paid, and a chapter 7 case is filed before receipt of such funds, the result in such cases would likely be different

Get Trusted, Experienced Bankruptcy Counsel Today

Applying decades of experience, Steven Taylor will assess your financial situation and hear you out on your goals.. To discuss your immediate concerns and long-term financial challenges, request a free telephone consultation with Steven Taylor today.  He can help you find the best solution and take decisive action to regain your financial foothold.

Steven P. Taylor, P.C. | Indianapolis Chapter 7 Bankruptcy Lawyer

Contact the Law Office of Steven P. Taylor, P.C. today.  Indianapolis Bankruptcy Office (317) 271-1111  Kokomo Bankruptcy Office (765) 868-0807  for a free  consultation about whether you should file for Chapter 7 bankruptcy in Indiana or email us your questions.  

Download Intake Worksheet

Download Budget and Required Document Checklist

Prior to your first meeting with my office, please complete the above downloads. They can provide me with further insight into your financial situation and allow me to determine if Chapter 7 bankruptcy is appropriate for you.

My practice serves individuals throughout Indiana, including Bartholomew, Boone, Brown, Carroll, Cass, Clinton., Delaware, Grant, Hamilton, Hancock, Hendricks, Howard, Johnson, Madison, Marion , Miami, Monroe, Montgomery, Morgan, Shelby, and Tipton county as well as the municipalities of Columbus,  Lebanon,  Zionsville,  Nashville, Galveston, Frankfort, Muncie, Gas City, Marion, Carmel, Cicero,  Fishers,  Noblesville, Sheridan, Westfield, Fortville, Greenfield, McCordsville, New Palestine, Avon, Brownsburg, Danville, Plainfield, Greensboro,  New Castle, Spiceland , Greentown, Hemlock, Kokomo, Russiaville, Franklin, Greenwood,  Nineveh, Trafalgar, Whiteland, Alexandria, Anderson, Elwood, Beech Grove, Camby, Castleton, Indianapolis, Lawrence, Speedway, Amboy, Bunker Hill, Converse, Miami, Peru, Bloomington, Crawfordsville Martinsville, Mooresville and Paragon.

 

 

We are a debt relief agency. OUR DEBT RELIEF LAWYERS help people file for bankruptcy under the united States bankruptcy code. IF YOU NEED DEBT RELIEF, OUR LAWYERS ARE READY TO HELP.


Quick Contact

* indicates required field.
*  
 
   
  
   Security Code
 
Send

If you would like to provide more detailed information about your situation, please click here.


CALL US