In Utah, what is property of the estate in a converted Ch. 13

Posted by on Dec 14, 2012 in Blog | 0 comments

We currently have a converted Chapter 13 case that is now a Chapter

7.  One of the Chapter 7 Bankruptcy Trustee’s is trying to say that a

tax refund that was received and spent while in the Chapter 13 is

property of the converted case.  This flies right in the face of

11 U.S.C. Section 348(f)(1)(A), this section of the Bankruptcy Code,

clearly provides that property of the converted estate “shall consist

of property of the estate, as of the date of filing of the petition, that

remains in the possession of or is under the control of the debtor on

on the date of conversion“.  Italics added for emphasis.

This seems clear that if the Debtors receive and spend their tax refund

prior to converting their case, the tax refund is no longer in their

possession of under their control and should not be considered

property of the Chapter 7 Bankruptcy Estate.

The Chapter 7 Trustee sees it a different way and is trying to force the

Debtors to turnover their tax refund.  I guess we will see what the

bankruptcy judge in Salt Lake City, Utah has to say.

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