Treatment of stocks turns mainly upon the type of account in which your stocks are held. The type of account is important because retirement accounts are a much more protected type of asset than ordinary stock brokerage trading accounts. Also, you must consider the value of the shares of stock that you own, though this usually only becomes relevant in cases in which the stocks are not in a protected retirement account.
Can I Keep My Stocks in Bankruptcy in San Diego?
If stocks are held in a retirement account, then the retirement account exemption will apply and you will most likely get to keep all of your shares of stock. If your stocks are not in a retirement account, then they will be treated similarly to cash in your bank accounts. You will be able to keep as much of the stocks as are covered by your exemptions.
Retirement Accounts
Retirement accounts have a special protection set forth by Federal Law. The retirement account exemption protects your retirement accounts up to a million dollars (actually, slightly over a million dollars). This figure is subject to change but traditionally has been in the $1 million range. The retirement account protection covers most tax-exempt retirement accounts. It covers IRAs, 401Ks, and most other types of retirement accounts. If your stocks are held in a retirement account, then the retirement account exemption will apply to protect your stocks.
Non-Retirement Accounts
If your stocks are not in a retirement account, then they will be treated similarly to cash in your bank accounts. You will be able to keep as much of the stocks as are covered by your exemptions. Because the exemption for cash in bank accounts is very small relative to the retirement account exemption, stocks in non-retirement accounts will be more difficult to protect when you file bankruptcy in San Diego.
Valuation
Treatment of your stocks in bankruptcy may also turn on valuation. If you own stocks in publicly traded company, valuation will be relatively simple. But if you own stocks in a company that is not publicly traded, valuation will be much more difficult. You will have to place a value on the stocks and it will up to the trustee appointed to oversee your case to decide whether he or she agrees with your valuation or wants to contest the valuation.
By hiring a reputable San Diego bankruptcy attorney that the San Diego trustees know will provide a good faith valuation, you can increase your chances of the trustee agreeing with your valuation, hence your case being handled more smoothly and achieving your desired result. An experienced attorney will also be able to tell you how you can expect shares of stocks to be treated in bankruptcy in San Diego, so that there are no surprises. Bankruptcy may not be the safest option, or you may need to do some planning before you file in order to ensure that your stocks are fully protected when you ultimately file your case.
