Consumer Bankruptcy

Is It Too Early to File for Bankruptcy Outstanding Checks Written Pre-Petition Are Property of the Estate

By: Elisa M. Pickel
St. John's Law Student
American Bankruptcy Institute Law Review Staff

Recently, in In re Brubaker[1] a Florida bankruptcy court held that funds related to checks that had not cleared were property of the estate under section 541(a)(1) of the Bankruptcy Code.[2] In Brubaker, the debtors wrote several checks before filing for chapter 7 relief.[3] As of the filing date, these checks had not cleared, and therefore the funds remained in the debtors’ bank account.[4] The bankruptcy court rejected the debtors’ argument that these funds transferred on the dates that the checks were presented to the recipient, and thus were not property of the estate. Instead, the court noted that funds do not transfer until the checks are honored. Thus, the court held that funds remaining in the account were property of the estate since the debtors’ bank had not honored the checks.

Court Denies Trustees Attempt to Revoke Section 554(c) Abandonment

By: Justin Zaroovabeli
St. John's Law Student
American Bankruptcy Institute Law Review Staff

Recently, in In re Reiman,[1] a Michigan bankruptcy court held that a trustee could not revoke abandonment of property that he later discovered to have additional value.[2] The Reimans, the debtors, listed both their house’s value and a secured claim above their house’s value on their chapter 7 schedules.[3] After the trustee filed his no-asset report, the bankruptcy case closed and the debtors received a discharge.[4] The property eventually foreclosed at a bid price below the house’s fair market value and the trustee moved to re-open the case to recover any additional value in the house.[5] Although the court re-opened the case,[6] the court denied the trustee’s motion to revoke abandonment because the trustee’s no asset-report was not influenced by an unforeseeable change or mistake of law.[7] The court also noted that policy considerations typically favored finality in bankruptcy cases.[8]

Disclosure of Social Security Number Does Not Give Debtors a Private Right of Action

By: Rebecca Rose
St. John’s Law Student
American Bankruptcy Institute Law Review Staff

Recently, in Matthys v. Green Tree Servicing, LLC (In re Matthys),[1] a bankruptcy court held that a debtor does not have a private right of action against the creditor who listed the debtor’s full social security number on its proof of claim. This holding is consistent with what the majority of courts have held in similar cases.[2] While the joint debtors in Matthys sought relief under various statutes, including Bankruptcy Code sections 105 and 107,[3] the court found that no private right of action existed. 

Overpaid Taxes Need Not be Turned Over to the Estate Under Section 542(a)

By: Christopher J. Rubino
St. John’s Law Student
American Bankruptcy Institute Law Review Staff

In Weinman v. Graves (In re Graves)[1], the Tenth Circuit held that section 542(a)[2] does not permit a chapter 7 trustee to force the IRS to turnover overpaid taxes of joint debtors where the debtors elected to apply the overpayment to the next year’s tax liability.  In Graves the joint debtors elected to apply their 2006 tax refund to their 2007 tax liability.[3]  Two months after filing their tax returns, the debtors filed for bankruptcy.[4] The Tenth Circuit affirmed the bankruptcy court’s refusal to order the IRS to turnover the debtors’ 2006 tax refund under section 542(a).[5] 

Pages

© American Bankruptcy Institute. All rights reserved. ABI is a (501)(c)(3) non-profit business (52-1295453)