Bankruptcy: When do I get my Property Back?

27 Apr Bankruptcy: When do I get my Property Back?

Technically speaking, once you file for bankruptcy, all your property is no longer yours.  Instead it is now part of a new entity called the Bankruptcy Estate, pursuant to 11 USC 522.  Nevertheless, in most cases, it goes back to you relatively quickly.

In chapter 7, all your property comprises the bankruptcy estate until one of a few events occur. Likewise, the same applies in chapter 13 depending what type of jurisdiction you are in…..1306 or 1327.  Ask your attorney for more clarification in this regard.

So, while you are in possession of the property, it technically is not yours.  You can not sell, transfer, loan, move, or otherwise dispose of the property without violating bankruptcy law.   Technically speaking, that means you can not use toilet paper, eat food in the fridge or pantry that you had on the date of filing, or throw away trash, without violating the bankruptcy laws, believe it or not. 

But how far does the court enforce this?  Well, for the most part, you can continue doing what you have been prior to filing.   This is because most of the property you own is not significant enough to be of value to your creditors and/or is exempt (protected under law).  As a general rule of thumb, you are fine as long as you do not dispose of any non-exempt assets or other big ticket items.  This process will last until either of the following:

1) Abandonment by the trustee,
2) Case Closure, or
3) Other Court Order.
So what’s the bottom line?  Don’t dispose of any property during any bankruptcy proceeding and if you have any questions, please consult your attorney.

Written by Michael G. Doan

 

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