QUESTION
If I receive money from stock option awards while under Chapter 13, am I entitled to any/all of that money?
Asked on Sep 03rd, 2014 on Bankruptcy - Michigan
More details to this question:
My company is privately held. Due to good job performance, my company gave me a Stock Appreciation Rewards. Essentially a stock option. It's worth nothing unless the company is sold. Rumor has it the company will be sold. Will I be able to keep any of this windfall?
7 ANSWERS
While in Chapter 13, you are required to disclose any 10% or higher increase in employment compensation or income. You may be required to pay the "disposable income" portion of the option to the trustee. You should consult a bankruptcy attorney with the details of the stock option.
Answered on Sep 08th, 2014 at 1:15 PM
As this would increase your disposable income, this property would be the property of the BK estate.
Answered on Sep 04th, 2014 at 2:35 PM
Until it actually becomes a cash income, I don't see this award being a problem. However, read the terms of your plan to see if it addresses the issue of income bonuses.
Answered on Sep 04th, 2014 at 2:21 PM
Commercial & Bankruptcy Law Attorney serving Powell, OH
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Ronald K. Nims
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Under most circumstances, these stock appreciation rewards would be considered your earnings; the funds would be taken and used to pay your creditors.
Answered on Sep 04th, 2014 at 7:49 AM
2 Awards
All disposable income is to be paid into the plan. If the stock option is not exercised or if the stocks do not pay dividends then there is no need to turn over to bk trustee.
Answered on Sep 04th, 2014 at 7:38 AM
Unfortunately, any such windfall received must be reported and paid over to the trustee, but not until it has a market value.
Answered on Sep 04th, 2014 at 7:37 AM
Appellate Attorney serving Grosse Pointe Farms, MI
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Musilli Brennan Associates, PLLC
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It will depend on the provisions of your plan. Were the options an asset disclosed in the plan? See an attorney with the details.
Answered on Sep 03rd, 2014 at 7:54 PM