nbsp nbsp nbsp nbsp nbsp nbsp nbsp Protecting Non Qualified Deferred Compensation Plans with Bankruptcy Insurance Bankruptcy insurance policies offer employees an effective means of protecting their non qualified deferred compensation plan benefits When used in conjunction with a rabbi trust it eliminates virtually all risks associated with a non qualified deferred compensation plan Unfortunately such policies are not the ideal solution for all employees Those in financially weak or private companies or employees who plan to continue working for to years may find that the cost of bankruptcy insurance policies outweigh the benefits History In a private letter ruling issued on August the Internal Revenue Service addressed the issue of an employee's purchase of bankruptcy insurance to protect amounts set aside for him by his employer in a rabbi trust A Fictional Example Jack and The Ubiquitous Jack was a participant in a non qualified deferred compensation plan funded by a rabbi trust Under his non qualified deferred compensation plan Jack would receive benefits from the NQDC plan if he completed a specified period of employment with his employer and retired under his employer's retirement plan The plan specifically provided that any financing vehicle used by the employer

Personal Bankruptcy Insurance Work Effort Opportunismand the Efficiency of the ‘Fresh Start’ Michelle J White University of California San Diego and National Bureau of Economic Research Preliminary draft May I Introduction This paper has dual purposes First it analyzes the objectives of personal bankruptcy law using the same general framework that economists have used to analyze the objectives of corporate bankruptcy law The intent of doing so is to draw out the parallels between the economics of personal versus corporate bankruptcy� two areas in which the literatures have developed in isolation from each other I argue that a number of the objectives that are important in corporate bankruptcy do not apply in personal bankruptcy In particular the problems of distressed but efficient firms liquidating when they should reorganize or distressed inefficient firms reorganizing when they should liquidate� i e “filtering failure” do not apply in personal bankruptcy In addition the problemof managers preferring risky over safe projects which is important in corporate bankruptcy does not apply in personal bankruptcysince most consumers borrow to finance consumption rather than investment The second purpose of the paper is to develop a model of optimal personal bankruptcy exemptions that takes into account the