Bankr. No.:
05-40158
Chapter:
7
Date of Decision:
August 24, 2005
Issue:
Whether the case trustee’s proposed settlement should be approved where the debtors were going to pay the estate $4,000 for any equity in their house (above their homestead exemption) but where the value of the home was unknown, where the settlement did not advise secured creditors that the equity was being sold back to the debtors with all encumbrances attached, and where the debtors had apparently encumbered the equity post-petition to generate cash to pay the trustee?
Ruling:
The settlement was not approved. While the Court did not require the trustee to avoid any lien on the equity that may have been placed on it by the debtors post-petition in violation of 11 U.S.C. § 549(a)(2)(B), the Court did direct the trustee to file a sale motion that better described the actual sale of estate property to the debtors that the trustee proposed.
Full Bankruptcy Court Decision:
