Bankruptcy, Chapter 13, and getting your stuff back....

I am in month 41 of a 60 month chapter 13 plan. The trustee has just paid off my car. I want to sell it but I am informed by my lawyer that I won't get the title till the 60 months is complete. He says I just have to leave it sit and continue to pay expenses for it? Really?

Ah ha! The perennial problem of "It's mine, dammit....but not really! It actually belongs to the trusty trustee!" See, during a bankruptcy, your assets (say, for instance, that pesky car) are actually controlled by the trustee, who's job it is to ensure everyone get's paid under your plan, and that any "value" in you estate is properly allocated to the creditors that own you until the end of the 5 year period. To wit: the car, while paid off, is still an asset of your estate, which makes it controlled by ye olde trustee. What your lawyer didn't tell you was that he can file a request with the trustee to abandon the asset (i.e. drop it out of that part of the estate that belongs to you) and give it back to you. You'll need to argue that it has limited to no value that the trustee could use to pay other debts with, but if you can do that, you have a chance to convince the trustee to abandon the property. See Rule 6007 which reads:

Rule 6007. Abandonment or Disposition of Property

(a) Notice of Proposed Abandonment or Disposition; Objections; Hearing. Unless otherwise directed by the court, the trustee or debtor in possession shall give notice of a proposed abandonment or disposition of property to the United States trustee, all creditors, indenture trustees, and committees elected pursuant to §705 or appointed pursuant to §1102 of the Code. A party in interest may file and serve an objection within 14 days of the mailing of the notice, or within the time fixed by the court. If a timely objection is made, the court shall set a hearing on notice to the United States trustee and to other entities as the court may direct.

To be fair, it is not likely the trustee will go to the effort to do this...but you could ask your lawyer to file a request, and you are certainly entitled to do so.

If you have a questions about bankruptcy or civil cases, give us a ring! We'll be glad to review your case or discuss how you may move forward. 703-402-2723 or 1-800-579-9864.

Hanover Law, PC
Offices in Fairfax, VA and Washington, DC
www.hanoverlawpc.com
2751 Prosperity Ave, Ste 150 Fairfax, VA 22031	Sean R. Hanover, Esq. Stephen Salwierak, Esq.	Lili O'connell, Esq. Charles Hatley, Esq.
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A question of BANKRUPTCY -- can you hide an asset?

I was discussing bankruptcy on an Internet legal site, and was asked the following question:

Question:
If a family member is on the verge of bankruptcy, can I purchase their house for the small amount still owed to the bank and have the house exempt as an asset when they declare bankruptcy? Or, would this be considered conspiracy to commit bankruptcy fraud?

My answer:

There is no conspiracy here!

Interesting idea, though. Generally, when a person declares bankruptcy, any asset is fair game for creditors. If the house in question has a good amount of equity, and the person declaring bankruptcy sells it for "a song" just before declaring bankruptcy, the trustee will yank it back (generally, a sale within 2 years of bankruptcy will be scrutinized -- beyond that, only if one of creditors ask for an investigation).

He or she will void the sale and take possession of the property in the interest of the other creditors. Now this is just a general overview -- there are exemptions (called "homestead") at both the state and federal level (you must choose one, not both), and there are certain protected transactions.

The bottom line, however, is before someone declares bankruptcy, they should consult a qualified professional to make sure they don't step on a landmine. If you need help with your bankruptcy, or advice on how to proceed, feel free to give us a ring! We have considerable experience in tax, bankruptcy an maximizing exemptions for both!

http://www.hanoverlawpc.com
703-402-2723

Sean R. Hanover, Esq.
Principal Attorney
The Hanover Law Firm is located in Washington, DC and Fairfax, VA. We practice
in both state and federal courts in VA, MD, and DC.