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Roger
Roger, Attorney
Category: Bankruptcy Law
Satisfied Customers: 26088
Experience:  BV Rated by Martindale-Hubbell; SuperLawyer rating by West
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is it criminal for an unsecured nonpiority bankruptcy creditor

Resolved Question:

is it criminal for an unsecured nonpiority bankruptcy creditor to refuse to return debtor assets after discharge (confirmation) and after repeated requests?
Submitted: 2 years ago.
Category: Bankruptcy Law
Expert:  Roger replied 2 years ago.

Hi - my name is XXXXX XXXXX X'm a Bankruptcy litigation attorney here to assist you.

 

What kind of asset does the creditor have if it is unsecured?

Customer: replied 2 years ago.

Hi Kirk,

creditor holds personal assets such as antique oriental art valued at about $30,000

 

Bill

Expert:  Roger replied 2 years ago.

This is not likely criminal, but rather a civil issue to be addressed by the bankruptcy court.

 

If the debt you owe the unsecured creditor was discharged, you don't owe the creditor, and if the property held is not collateral given to secure the debt, the bankruptcy trustee would have a right to recover the asset and liquidate to provide money to pay creditors - including this unsecured creditor - on a pro rata basis.

 

Thus, you can inform the bankruptcy trustee of this asset and all him/her to go after it to generate money to pay your creditors, but it will not likely result in a return of the property to you.

Customer: replied 2 years ago.
but is it criminal for an unsecured creditor to continue holding assets?
Expert:  Roger replied 2 years ago.

I don't see this as being criminal because it is a creditor/former creditor, it could claim that possession of this property is its security for the loan or come up with some other excuse as to why it is entitled to the property.

 

You can certainly contact the authorities and ask to press charges for theft or conversion, but I think they will tell you it is a civil matter.

 

 

Customer: replied 2 years ago.
interesting, I would think that the creditor would petition the court for Secured Priority Creditor status and provide supporting documentation such as a note, UCC-I, loan agreement, warehouse receipt etc. at the 341 hearing. This creditor did no object to her status.
Expert:  Roger replied 2 years ago.
If the property it now holds was not listed as collateral in the loan documents, it can't claim to the bankruptcy court that it is secured by any collateral. However, if the creditor holds something in its possession, the trustee must file a motion to recover it for the bankruptcy estate.
Customer: replied 2 years ago.
so, do I conclude that it is not a crime for an unsecured creditor to continue to hold debtor's assets. If so, where is the integrity of the court post confirmation?
Expert:  Roger replied 2 years ago.

If the property was not listed as an asset in your schedules, the court likely has no idea that this property is out there. That's why it is important to inform the trustee and allow him/her to recover the asset for the benefit of the estate.

 

I agree that it is likely illegal for this creditor to keep the property as it belongs to the bankruptcy estate - but I don't see it as criminal mainly because the bankruptcy court can order that the asset be recovered from this creditor.

Roger, Attorney
Category: Bankruptcy Law
Satisfied Customers: 26088
Experience: BV Rated by Martindale-Hubbell; SuperLawyer rating by West
Roger and 2 other Bankruptcy Law Specialists are ready to help you
Customer: replied 2 years ago.

Thanks Kirk and enjoy the holidays,

 

Bill

Expert:  Roger replied 2 years ago.

Sure.

 

I hope you have a great Christmas holiday yourself!

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