Section 108(b) extends the right of a debtor to redeem property sold in a tax sale. Bryant v. Hamilton Cty, No. 15-12367, Adv. Proc. No. 15-1120 (Bankr. E.D. Tenn. April 5, 2016). Read More
Tag Archive: trustee power
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Debtor Benefits from 108(b)’s Extension of Time to Redeem
Posted by NCBRC - May 5th, 2016
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Trustee Steps into Shoes of Lienholder upon Avoidance of Lien
Posted by NCBRC - July 26th, 2013
NCBRC filed an amicus brief on behalf of the NACBA membership in the case of In re Traverse, 13-9002 (1st Cir. July 10, 2013). In that case, when the chapter 7 debtor entered into bankruptcy, she sought to exempt her home from the estate and continue making her mortgage payments. It was undisputed that the debtor was not in default on her mortgages. The trustee, however, successfully avoided one of the liens as unperfected and sought to sell the debtor’s residence for the benefit of creditors. The lower courts found that, having avoided the lien, the trustee stood in the shoes of the debtor and had the power to sell the property.
In its amicus brief before the First Circuit, NACBA argues that application of Bankruptcy Code sections 704, 541(a), 551, and 544, demonstrates that upon avoidance and preservation of a lien the trustee stands in the shoes of the former lienholder, not the debtor. Therefore, the trustee did not gain the power to sell the property except to the extent that the lienholder would have had that power. See In re Trout, 609 F.3d 1106, 1110 (10th Cir. 2010) (“under § 551 the trustee steps into the shoes of the former lienholder, with the same rights in the collateralized property that the original lienholder enjoyed.”). Because the debtor was current on her payments, under state law, there was no default to trigger the right to foreclose.
Thanks to Ray DiGuiseppe for authoring NACBA’s brief.
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American College of Bankruptcy
The American College of Bankruptcy is an honorary public service association of bankruptcy and insolvency professionals who are invited to join as Fellows based on a proven record of the highest standards of professionalism plus service to the profession and their communities. Together with its affiliated Foundation, the College is the largest financial supporter of bankruptcy and insolvency-related pro bono legal service programs in the United States.NACBA
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