Consumer Bankruptcy Journal Winter 2018 - Page 20

Disclosure of Post-Petition Claims in a Chapter 13 Bankruptcy By James J. Haller, Esq. Haller Law Lincolnshire, Illinois H ave you ever received an irate call from a chapter 13 client upset that you didn’t list their personal injury lawsuit and blaming you because he won’t be able to collect? Have you then found that no personal injury action was listed on Schedule B because the accident occurred post- filing? This article discusses the legal arguments, what can you do 1 , and how can you guard against it in the future. routinely search PACER to determine if the plaintiff had previously filed for bankruptcy. The Defendant will then file a motion to dismiss or motion for summary judgment typically asserting two arguments: (1) the debtor lacks standing to pursue the claim, or (2) the debtor is judicially estopped from pursuing the claim. the case …” Next, 11 U.S.C. § 1306 expands the chapter 13 estate to include property specified in § 541 plus (1) all property of the kind specified in §541 that the debtor acquires after the commencement of the case and (2) earnings from services performed by the debtor after the commencement of the case. Standing Argument The situation usually rises when the Defendant finds out the Plaintiff (client) is in a pending chapter 13 bankruptcy. Personal injury and employment discrimination defense counsel now Defendants usually argue (1) the claim was part of the client’s bankruptcy estate, (2) that the Bankruptcy Code requires disclosure of post-petition claims, and (3) because it was not disclosed the debtor does not have standing. Courts have correctly held that a chapter 13 debtor’s interest in claims arising post-petition are part of the bankruptcy estate. See In re Waldron, 536 F.3d 1239, 1243 (11th Cir. 2008) and In re Carroll, 735 F.3d 147 (4 th Cir. 2013). Check the caselaw in your jurisdiction. 1 This is an active issue before the courts. If you are addressing this issue please contact Tara Twomey, the NACBA Amicus Project Director. She has briefed this issue multiple times in appellate courts and is very familiar with the law. Her email address is here . 20 CONSUMER BANKRUPTCY JOURNAL The Bankruptcy Estate The bankruptcy estate is defined by the Bankruptcy Code. Section 541(a) “creates an estate…comprised of all the following property, wherever located and by whomever held … all legal or equitable interests of the debtor in property as of the commencement of Winter 2018 Duty to Disclose The duty to disclose is expressly laid out in Bankruptcy Rule 1007(h) titled Interests Acquired or Arising After Petition. If, as provided by §541(a)(5) of the Code, the debtor acquires or becomes entitled to acquire any interest in National Association of Consumer Bankruptcy Attorneys