The Supreme Court has interpreted the definition of "property of the estate" broadly, finding § 541(a)(1) can be read "to include in the estate any property made available to the estate by other provisions of the Bankruptcy Code." There are no requirements in the code "that the debtor holds a possessory interest in the property at the commencement."
Avoidance actions are intended to prevent the debtor from transferring away assets before filing bankruptcy and to prevent certain creditors from receiving more funds than other creditors. Avoidance actions allow the trustee or creditor to bring an action against the individual who may have unfairly benefited from the debtor’s transfer.
Section 541(a) of the Bankruptcy Code defines property of the estate. Property of the estate includes: "all legal or equitable interests of the debtor in property as of the commencement of the case." What this means to a bankruptcy filer is; that the vehicle, trailer or other asset that was titled to the debtor, but what the debtor considers an “asset” of another: child, parent, or friend, cannot be transferred without subjecting the transfer to an avoidance action, if the transfer is made too close to the date of filing.
Avoidance actions are the property of the estate. The Bankruptcy Code makes these assets available to the estate after the commencement of the case. Debtors in a bankruptcy case are free to transfer assets before the filing of their case, however, transfers of assets in which the debtor has a legal or equitable interest will subject the transfer to a possible avoidance action. Transferring an asset for fair market value will not subject the transfer to an avoidance action, but a simple transfer of the asset with no consideration deprives the bankruptcy estate and can be recovered.
Avoidance actions allow recovery of transfers for the benefit of the bankruptcy estate. Contact the attorneys at LifeBackLaw and see us at www.LifeBackLaw.com and let us help you get your life back.