Yes, there are. While Section 541(a) of the Bankruptcy Code broadly outlines the extent of the bankruptcy estate, and it includes almost all assets of the debtor, there are assets that are not part of the bankruptcy estate. By that, I mean the assets never become part of the bankruptcy estate, and therefore, do not get administered by the trustee.
Section 541(b) outlines some of these assets. Certain non-residential leases that have expired before the commencement of the case are not part of the bankruptcy estate. Neither are certain monies placed in Education IRA’s or Section 529 plans.
It also includes certain powers of the debtor may hold solely for the benefit of another entity. Further, monies withheld by an employer and put into certain retirement accounts qualified by the IRS are also not assets of the bankruptcy estate.
When in doubt, you always have a competent bankruptcy attorney answer your questions about what is and is not an asset of the bankruptcy estate. The reality is the vast majority of debtor’s assets are assets of the estate.
If the asset is not an asset of the estate, what does this mean? It means debtor is free to sell or transfer this assets immediately after filing the Chapter 7 Bankruptcy case. There is no need to wait the 30 days after the 341 meeting because there is no asset to exempt since it did not come into the estate. Again, always check with competent bankruptcy counsel before you transfer any asset.
Query, can you transfer an asset that does not belong to the bankruptcy estate, prior to filing bankruptcy, for less than fair market value, and not run afoul of Section 548 of the Bankruptcy Code’s fraudulent transfers? No, it still would be a fraudulent transfer trustee could avoid.
CONCLUSION
When the time is right, or when you are ready, reach out to Minnesota’s HIGHEST GOOGLE REVIEWED bankruptcy law firm at www.kainscott.com. You will be glad you did!
