Press Release

New Ruling Reverses the Southern Illinois Bankruptcy Court Policy that had Required Debtors to Turn Over all Assets Acquired During Repayment Plan Bankruptcies

A Chapter 13 case is a type of bankruptcy where a debtor repays part of his or her debts according to what they can afford, under Court supervision. They can use the case, if necessary, to catch up arrearages on a house or car, or if it’s too expensive, surrender it without having to worry about being sued.

In this case, I filed an appeal for a client to challenge a General Order issued in the Bankruptcy Court for the Southern District of Illinois that required all Chapter 13 debtors to not only make their court approved plan payments to the case trustee every month, but also, to amend their case file every time they came to own any additional property during their case, even if it was a gift (such as an engagement ring or if a parent gives their debtor son or daughter a used car to replace one that just broke down). The same would apply if a Chapter 13 debtor were injured at work during the case and a worker’s compensation claim paid them $10,000 for loss of several fingers in a work accident. The Court rule required these funds or items to be turned over to the trustee so the assets could be sold and their value given to the creditors.

I was outraged and in turn appealed the rule. This press release is intended to inform the public that the rule has been disallowed. I would appreciate it if you chose to run this or your own story. Please see the attached copy of the Opinion.

Thanking you in advance,
Marcus H. Herbert