Bankruptcy Exemptions, Pension Plans, And Section 409A

This post covers the recent case of In re O’Malley, 127 AFTR 2d 2021-XXXX (DC IL) (March 2, 2021).

In this case, the Debtor failed to disclose a retirement plan in his initial bankruptcy schedules in a case originally filed in March, 2013.  At the creditor meeting, the Debtor disclosed the existence of an interest in a MetLife defined benefit pension plan, and committed to amending his schedules to include that interest.  Subsequently, the Debtor did in fact amend his schedules to list a single “Met Life Defined Benefit Pension Plan” of “Unknown” value and proceeded to claim 100% of its value as exempt from the estate under an Illinois law that protects pension benefits.  Following the conclusion of the creditor meeting, neither the Trustee nor any creditor objected to the exemption claimed by Mr. O’Malley for the pension plan disclosed in the amended schedules.

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