A bankruptcy court rejected a Chapter 13 trustee’s valuation of the debtor’s pre-petition cause of action and found that an estimated value of the state court case should not be included in the plan distributions but that the plan may be modified if the debtor obtains a money judgment during the commitment period. In re Morales, No. 12-7296 (Bankr. P.R. July 2, 2015). [Read more…] about Trustee’s Valuation of Unresolved Pre-Petition Cause of Action Rejected
Jones v. Bob Evans Farms, Inc., No. 15-2058 (8th Cir.)
Type: Amicus
Date: August 10, 2015
Description: Whether under Rule 1007(h) a chapter 13 debtor has a duty to disclose acquisition of post-petition legal claim.
Result: Affirmed, January 26, 2016. Debtor lost.
Funds from Consent Order Not Estate Property
Funds the debtor received through operation of a post-petition consent order between banking regulators and Bank of America were not part of the bankruptcy estate subject to turnover. MacKenzie v. Neidorf (In re Neidorf), No. 14-1496 (B.A.P. 9th Cir. July 10, 2015). Carrie Margaret Neidorf’s home was foreclosed upon while she was in bankruptcy and years later, while her bankruptcy case was still open and pursuant to a national settlement between banking regulators and Bank of America, she received $31,250 as a result of the foreclosure. The 2011 Consent Order (amended in 2013) required Bank of America to make a $1,127,453.261 cash payment to a Qualified Settlement Fund. That fund was then distributed to borrowers who had experience foreclosure within a specified period. The chapter 7 trustee sought turnover of the funds arguing that they were property of the estate. The bankruptcy court disagreed and the BAP affirmed.
The BAP stated three conditions that must be met for after-acquired property to be considered part of the estate under section 541(a)(7); “(1) It must be created with or by property of the estate; (2) acquired in the estate’s normal course of business; or (3) otherwise be traceable to or arise out of any prepetition interest included in the bankruptcy estate.” The panel found that the fact that the foreclosed residence was property of the estate was not dispositive. It found that the debtor’s entitlement to the foreclosure payment arose out of the post-petition Consent Order rather than out of her ownership of the property. The panel concluded: “Seen in this light, that the estate had an interest in Debtor’s Residence is not enough. Nowhere has Trustee shown how the estate obtained an interest in the Foreclosure Payment itself when the qualifying events giving rise to Debtor’s legal rights to the payment all occurred post-petition and were held solely by the borrowers.”
Debtor Lacks Standing to Bring Adversary Complaint Based on Pre-Petition Claims
The debtor’s pre-petition TILA claims were part of his Chapter 7 bankruptcy estate and, therefore, only the trustee had standing to bring those claims while the bankruptcy was pending. Bernstein v. Wells Fargo (In re Bernstein), No. 14-65054, Adv. Proc. 14-5306 (Bankr. N.D. Ga. Jan. 2, 2015). [Read more…] about Debtor Lacks Standing to Bring Adversary Complaint Based on Pre-Petition Claims
Lump Sum Workers’ Compensation Settlement Exempt under 522(d)(11)
Contrary to the majority opinion, proceeds of a lump sum workers’ compensation settlement were found to be exemptible under section 522(d)(11)(E), to the extent necessary for support of the debtor and his dependents. In addition, a Medicare “set aside” is not property of the estate. Carr v. Arellano (In re Arellano), No. 14-990 (Bankr. M.D. Pa. Jan. 5, 2015). [Read more…] about Lump Sum Workers’ Compensation Settlement Exempt under 522(d)(11)
Bankruptcy Reopened to Add Insurance Proceeds to Estate
The bankruptcy court properly reopened the debtor’s Chapter 7 case to permit the trustee to administer insurance proceeds where the debtor’s interest in the funds pre-dated his bankruptcy even though he did not acquire the funds until post-discharge. Wojcik v. Gold (In re Daher), No. 14-8028 (B.A.P. 6th Cir. Dec. 4, 2014). [Read more…] about Bankruptcy Reopened to Add Insurance Proceeds to Estate
Charitable Contribution in Excess of 15% Avoidable in its Entirety
In a sharply circumscribed opinion, the Tenth Circuit found that the trustee could avoid in their entirety charitable contributions in excess of 15% of the debtors’ gross annual income. Wadsworth v. The Word of Life Christian Center (In re McGough), No. 12-1142 (Dec. 16, 2013). [Read more…] about Charitable Contribution in Excess of 15% Avoidable in its Entirety
Fifth Circuit Finds Defensive Appellate Rights Property of Estate
In a case of first impression, the Fifth Circuit Court of Appeals found that a chapter 7 debtor’s right to appeal a state court judgment against him was property of the estate that could be sold by the trustee. Croft v. Lowry (In re Croft), No. 13-50020 (Dec. 10, 2013). [Read more…] about Fifth Circuit Finds Defensive Appellate Rights Property of Estate
Absolute Assignment of Rents Precludes Turnover
This case centered on whether rent collected by the debtors becomes part of the bankruptcy estate even though the right to collect the rents had been absolutely assigned to their lender PHH Mortgage (“PHH” or “assignee”). Relying on In re Jason Realty, 59 F.3d 423 (3d Cir. 1995), the bankruptcy court found that PHH, as assignee, was the owner of the right to collect rents and, therefore, the debtor had no ownership interest to augment the bankruptcy estate. The district court affirmed. In re Cordova, No. 13-810 (D. N.J. Oct. 22, 2013). [Read more…] about Absolute Assignment of Rents Precludes Turnover
Inheritance Received more than 180 Days Post-Petition Part of Chapter 13 Estate
The Fourth Circuit found that an inheritance acquired after section 541(a)(5)’s 180 day look-back period but prior to termination of the chapter 13 case, becomes part of the bankruptcy estate under section 1306(a)(1). Carroll v. Logan (In re Carroll), No. 13-1024 (Oct. 28, 2013). [Read more…] about Inheritance Received more than 180 Days Post-Petition Part of Chapter 13 Estate