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Selling Assets While a Chapter 7 Case Is Open

Published May 7, 2014 by Sasser Law Firm

When a chapter 7 is filed, the debtor’s assets become part of the bankruptcy estate. Individual chapter 7 debtors are permitted to claim certain exemptions in property that have the effect of protecting the asset from liquidation by the chapter 7 trustee. A significant number of chapter 7 filings are “no asset” cases because all of the debtor’s assets are exempt or the assets are of inconsequential value to the bankruptcy estate. However, while a chapter 7 is pending the debtor is not permitted to sell or otherwise transfer estate assets. Chapter 7 cases are generally open for 100 days but can be open for a much longer period of time. Chapter 7 cases can remain open after a discharge order has been entered. If a chapter 7 case is open and the debtor wants to sell or otherwise transfer an estate asset then he/she will need to file a Motion to Compel Abandonment. If the Motion is successful then the asset will be removed from the bankruptcy estate and the asset can then be sold or otherwise transferred.

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