Supreme Court Decision on IRA's _ Bankruptcy Rousey v Jacoway

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Supreme Court Decision on IRA's _ Bankruptcy Rousey v Jacoway Powered By Docstoc
					In the year of 1999, Northrop Grumman was conducting a corporate downsizing and
as a part of that they asked Richard Rousey to go for an early retirement. The same
thing followed with Richards’s wife Betty Rousey as she was also laid off. At that
point of time the couple had both the (401k) and pension funds and had six months to
decide the course of action to be taken with those funds. They went ahead and tried to
seek advice in order to take an appropriate course of action. They came across a
banker at a local bank facility who suggested them to put the funds into individual
retirement accounts which is also known as IRAs.
  It was tough times for the Rouseys as they develop it difficult to get work. The
couple marked to sell there house in Arkansas. There were a sum total of two
mortgages on the home and selling it could only salvage one of the mortgages. When
the second mortgage lender tried to claim money for the second mortgage the couple
filed a joint application under Chapter 7 of the Bankruptcy Code on April 2001. At
this point of time the court had appointed Jill Jacoway to help the decisions in this
case.
  The filing made by the Rouseys was an effort to claim portions of their two single
IRA A/Cs as liberate status for the absolute case of bankruptcy. Richard Rousey and
Betty Rousey had claimed an amount of $55000 to be excuse under contrary
subsections of 11 U.S.C 522(d). But Jacoway had objected exemptions under 522 (d)
(10) (E) which amounted to $44000. This decision had come after three months and it
was an incisive blow for the Arkansas couple. In February 2002 Jacoway stated that
the payments of the IRA does not prepare as "an equivalent plan or contract" and are
not collectible on account of "illness, infirmity, death, age or length of service."
  The Rouseys still were not going to give it up. They appealed the bankruptcys court
order to the Bankruptcy Appellate Panel for the 8th Circuit. On the month of
September in 2002 the U.S, BAP agreed unanimously that regular withdrawal from
the IRA A/C makes the account look less like exempted retirement plan and more like
a Savings Bank A/C with favorable tax care.
  In his request to the U.S. Supreme Court, T.R. Brixey the attorney of the Rouseys,
impelled the Court to response the issue that "affects tens or even hundreds of
thousands of particular bankruptcy petitions per year and fundamentally alters the
lives of the people who file them."
  The court accepted the review of the situation in mid 2004, June to be perfect. By the
month of April in 2005, the court unanimously reversed their decision stating that the
Rouseys could excuse IRA assets from the bankruptcy holdings. This unanimous
decision was delivered by Justice Clarence Thomas. This was possible because the
IRAs fulfilled both of the "522(d) (10) (E) requirements at issue. The Arkansas couple
was awarded the right to receive payment on account of age and also because IRA fell
into the type of plans or contracts cited in the bankruptcy code.
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