What is the name of your state (only U.S. law)? Nebraska
Just a little background so maybe I can actually get an answer to this question.
My husband filed Chapter 13 bankruptcy in November of 2007. Obviously he had to include all his debts – this included a load/indemnity agreement that he opened in 2005. This is where it gets confusing because while he did take a lump sum payment from a Californian Company in return for forwarding them his military retirement for 10 years. The payments could not be assigned, as this is not legal due to restrictions on federal retirement funds.
The company has ‘opted out’ of the bankruptcy and is still demanding the full repayment amount (currently around $127,000) instead of the settlement they would have taken in the bankruptcy (more like $27,000). This company sued my husband and his bankruptcy lawyer has been representing him in the case – but he cannot seem to explain exactly how they are getting away with this.
I have read all the paperwork that has come in on this – and basically the company has gotten in trouble previously for making this type of deal using a military retirement as security. The fact that is not legal to assign the funds directly to the company my husband was paid and he was required to make payment to the company. Does that not make this a loan?
The company is arguing that they should not have to accept the settlement under bankruptcy because “they would not have loaned him the money without a guarantee of repayment” but in all honesty no one would lend money if they knew it would end up in bankruptcy. This company primarily deals in indemnity buy-outs (lump sum payment in return for allocating the indemnity to them) and I really don’t understand how they can do this. I have tried asking his lawyer but he never explains it well and quite frankly the bill is already over $6,000 and we simply cannot afford to keep paying him to double talk.
My question is how is this possible? Doesn’t this have to be either a loan or assignment? What am I missing here? It is not an assignment (that would make it illegal) but they are claiming it is also not a ‘normal’ loan so they are not subject to the bankruptcy.
Sorry for the length of this post but I wanted to provide the information to hopefully get an answer. Thank you for your timeWhat is the name of your state (only U.S. law)?