Relying on policy and equity considerations, the Fifth Circuit found that funds paid into a plan but not yet distributed at the time of conversion should be distributed to creditors. Viegelahn v. Harris (In re Harris), No. 13-50374 (5th Cir. July 7, 2014) (disagreeing with In re Michael, 699 F.3d 305 (3d Cir. 2012)). [Read more…] about Circuit Split on Undistributed Funds at Time of Conversion
Debtor’s Claim to Equitable Distribution from Spouse’s Pension Property of Estate
Where no Qualified Domestic Relations Order (QDRO) has yet been entered, the debtor’s claim for equitable distribution of her ex-husband’s pension is property of the estate and the trustee is free to negotiate a settlement agreement with respect to that pension. Walsh v. Urmann (In re Urmann), No. 11-21606 (Bankr. W.D. Pa. Apr. 15, 2014). [Read more…] about Debtor’s Claim to Equitable Distribution from Spouse’s Pension Property of Estate
Trustee May Not Compel Use of Non-Estate Property in Modified Plan
Relying on Eleventh Circuit precedent, a Georgia bankruptcy court found that a debtor could not be compelled to contribute life insurance proceeds received more than 180 days post-petition to his modified chapter 13 plan. In re McAllister, 2014 WL 1624106 (Bankr. N.D. Ga. April 3, 2014). [Read more…] about Trustee May Not Compel Use of Non-Estate Property in Modified Plan
Trustee Stands in Shoes of Creditor upon Avoidance of Lien
In a methodical and thorough opinion, the First Circuit found that “preservation of a lien entitles a bankruptcy estate to the full value of the preserved lien–no more and no less.” Under this principle, the court found that the trustee did not have the power to sell the debtor’s homestead where the trustee avoided the primary lien on the residence but the debtor was current on the mortgage and her homestead exemption exceeded the value of the property. DeGiacomo v. Traverse (In re Traverse), No. 13-9002 (1st Cir. May 23, 2014). [Read more…] about Trustee Stands in Shoes of Creditor upon Avoidance of Lien
Undistributed Funds Returned to Debtor upon Dismissal
When a chapter 13 case is dismissed, funds held by the trustee must be returned to the debtor. So said the district court in Williams v. Marshall (In re Williams), No. 13-2326 (N.D. Ill. Apr. 11, 2014). [Read more…] about Undistributed Funds Returned to Debtor upon Dismissal
Property of Estate Includes Inheritance More Than 180 Days Post-Petition
The chapter 13 debtor inherited $30,000.00 from his mother more than 180 days post-petition but before the close of his chapter 13 case. When the debtor failed to turn over the inheritance for the benefit of creditors, the trustee moved to dismiss. Finding that section 1306(a)(1) brought the inheritance into the estate, the court granted the motion. The BAP for the Ninth Circuit agreed. Dale v. Maney (In re Dale), No. 13-1251 (B.A.P. 9th Cir. Feb. 5, 2014). [Read more…] about Property of Estate Includes Inheritance More Than 180 Days Post-Petition
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
SunTrust Consent Order Payment Not Part of Estate
After the chapter 7 debtors received their discharge they disclosed to the trustee that they had received funds as a result of a settlement agreement between the Federal Reserve and SunTrust Mortgages. They moved to reopen their bankruptcy and amend their schedules to reflect the payment. They also sought to exempt the payment as related to a “potential wrongful foreclosure claims against SunTrust Mortgage” under applicable state exemption laws. The trustee objected to the exemption and sought to administer the payment as part of the bankruptcy estate.
The issue turned on whether the payment was a “legal or equitable interest” of the debtors that existed as of the commencement of the case. The bankruptcy court found that it was not. In re Vanwart, No. 13-515 (Bankr. E.D. N.C. Aug. 27, 2013).
[Read more…] about SunTrust Consent Order Payment Not Part of Estate