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Another Question About Wording in Confirmation Document

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    Another Question About Wording in Confirmation Document

    I am looking over my confirmation document and wonder if anybody knows what this ominous sounding language means:

    All property of the estate as defined in U.S.C. 541 and 1306, including, but not limited to, any appreciation in the value of real property owned by the debtor as of the commencement of the case, shall remain property of the estate during the term of the plan and shall vest in the debtor only upon discharge. All property of the estate shall remain within the the exclusive jurisdiction of the bankruptcy court. The debtor shall not transfer, sell or otherwise alienate property of the estate... The debtor shall be responsible for preserving and protecting the property of the estate.

    I know this probably means that I cannot sell my house or car without some type of permission, but what about other "small" assets? For, example I had listed on my petition, furniture and equipment for my small business, but the value collectively for those items is less than $2,500.

    #2
    Unless the Plan and/or Order Confirming provides otherwise, upon Confirmation, property of the estate vests back to the debtor and the debtor is typically free to do whatever the debtor wants with the property. Some attorneys believe it is safer to leave the property as property of the estate. Why. . .

    If a debtor incurs post petition debt and gets sued for non-payment, a judgment creditor cannot collect since the debtor owns NOTHING. Personally, my Orders vest the property in the debtor and the only time I change my typical language is if I am worried about post petition debt. This is not a usually happening and, quite frankly, I cannot think of one case is the recent past where I wanted to leave property under the protection of the bk.

    Another example where property should remain "property of the estate" is a large non-exempt asset. A Trustee should require language that such an asset remains property of the estate thus protecting it from disposal by the debtor (in theory anyway).

    Again, whether property vests back or not is usually a preference by the attorney - or a requirement by the Trustee.

    Des.
    Last edited by despritfreya; 05-25-2011, 08:21 PM. Reason: add comment

    Comment


      #3
      Thanks, Des. This does help clarify this somewhat for me. As far as post petition debt goes, I sure am not looking to take on any new debt at the moment. :-) Probably, this wording could be because of my lawyer. Prepetition, I had 2 lawsuits pending against me for unsecured debt, and it looked like several more were to follow.

      The industry I am involved in also seems to attract a lot of lawsuits. Trade journals I read are full of stories of people being sued by their customers. My attorney, who is known to have experience in business bankruptcies, probably read up on it. Maybe being self-employed complicates things a little to say the least!

      Then, there was the matter of my "classic car." I was even asked specifically by the trustee at my 341 if I still had it.

      Comment


        #4
        I wrote my Plan and I had a specific provision to vest the property back in the Debtor (me) upon confirmation. There are strategies on whether you want to vest post confirmation or post discharge.
        Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
        Status: (Auto) Discharged and Closed! 5/10
        Visit My BKForum Blog: justbroke's Blog

        Any advice provided is not legal advice, but simply the musings of a fellow bankrupt.

        Comment


          #5
          I am just curious, no language either way on this subject appears in the standard 'checkbox' confirmation order issued by the judge in NJ.
          Do you add this language yourselves?
          filed chapter 13..confirmed...converted to chapter 7...DISCHARGED!

          Comment


            #6
            If you don't add the language, the property vests back in the Debtor automatically upon confirmation.

            11 USC 1327 (b) Except as otherwise provided in the plan or the order confirming the plan, the confirmation of a plan vests all of the property of the estate in the debtor.
            Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
            Status: (Auto) Discharged and Closed! 5/10
            Visit My BKForum Blog: justbroke's Blog

            Any advice provided is not legal advice, but simply the musings of a fellow bankrupt.

            Comment


              #7
              catleg, I don't know who added the language, my attorney, the judge or the trustee. On another page, I have a "certificate of service" that states that the proposed order of confirmation was submitted to the debtor, and debtor's counsel, submitted by the trustee. Maybe it's a preference of the trustee.

              The good thing about it maybe, it makes me seem almost temporarily judgement proof, if someone wanted to sue me, as Des pointed out:
              a judgment creditor cannot collect since the debtor owns NOTHING
              But then it sure looks like it would be a lot of trouble if I wanted to sell something, ie. my house or car, looks like I could't. The "Order Confirming..." also states: The debtor shall be responsible for preserving, and protecting the property of the estate.

              Oh, well! Looks like I'm "indentured" for the next few years!

              Comment


                #8
                Thanks for the info. Interesting subject.
                filed chapter 13..confirmed...converted to chapter 7...DISCHARGED!

                Comment

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