The Honorable John H. Squires, Bankruptcy Judge of the Northern District of Illinois, says NO!
Michael Mason was popped in Dekalb County IL for possession with intent to deliver over 30 grams of weed. The Circuit Court set bail at $700 Grand. Illinois law permits a criminal defendant to post a cash bond of 10 percent. In this case, Mason posted $70K to get out of jail while awaiting trial.
In order to hire an attorney, Mason assigned the bond money to a criminal defense attorney, a common procedure in Illinois.
Later, Mason filed a chapter 7 bankruptcy case. Then the fun began. The chapter 7 trustee sued a whole bunch of people, from the two little old ladies who helped post the bond, to the Court Clerk who held the money, to the criminal defense attorney.
The task at hand – the trustee had to prove either A) that the bond money was property of the bankruptcy estate (under 11 U.S.C. 542) or B) that someone held money that belonged to the debtor, Mason (under 11 U.S.C. 543).
Bottom Line: Judge Squires held that the trustee failed to prove either case. The bond assignment was a complete assignment of all interest that Mason had in the money, therefore, at the time Mason filed bankruptcy, the bond money was neither property of the estate nor property of the debtor.
The case is In Re Mason, 2008 WL 1891402 (Bankr. N.D. Ill).
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