Would you spell out what the statue states re a trustee selling property of the BK estate if there is no profit from a sale?
A: If the debtor's homestead is exempt in a specified sum, only the right to receive that precise amount ultimately passes out of the estate. The asset itself and any other proceeds from its disposition remain part of the estate. In re Reed (9th Cir. 1991) 940 F.2d 1317, 1321; In re Alsberg (9th Cir. 1995) 68 F.3d 312, 314-315.
In theory, the above status of a homestead property would permit the trustee to sell the property for purely vindictive purposes -- even though the bankruptcy estate would receive nothing for the effort. However, to do so would be such a frivolous action on the trustee's part that it would be subject to a Fed. R. Bankr.. Proc. 9011(b) motion for sanctions.
In short, it could cost the trustee his/her trustee appointment.
What does the code say exactly that would apply to selling property when there is little or no net profit after the homestead exemption of 175K. I cannot just state numbers and not know what the code says that pertains to my situation.
A: You would have to allege that the trustee is acting out of vindictiveness, not in the interest of the bankruptcy estate. Ultimately, to prevail, you would want to provide an appraiser expert witness who could testify that the likely net proceeds would be effectively nil. Otherwise, if there is credible evidence to suggest that the trustee can obtain proceeds for creditors from the sale, then the court may order the sale.
Note that the trustee may have additional costs. Many times, the trustee hires outside counsel to bring various motions, rather than the trustee doing so him/herself. That counsel's fees to the bankruptcy estate are substantial. I would imagine every motion pleading runs around $2,500 -- which the lawyer receives if the property sells and returns sufficient proceeds to the estate. Also, there are sales commissions, auctioneer fees, etc., so it's not just a black and white number. You can make all of those arguments in an objection to the sale.
The trustee's attorney has told the Judge not to insert himself into the trustee's job! Surely the Judge has a say on what the trustee does - some authority or case law where the Judge can step in and say there is wrong doing by the trustee - is their a code I can refer to?
A: That's weird. Either the judge is a wimp, or the trustee is mentally ill. If I were the judge, I would hold the trustee in contempt for the temerity to suggest that the judge does not control the proceedings.
I am trying to add to my objection to a sale the fact that the trustee & his attorney have spent several thousand of dollars filing false information with the court in their attempt to sell my home giving false numbers of a net profit with nothing left for creditor. The trustee's attorney has already charged thousands in fees for some months on his false court filings while ignoring the homestead exemption.
A: You don't need code sections to suggest that the trustee's motives seem to be more about punishing the debtor than about paying the creditor claims. You just add up the costs and subtract them from the fair market value of the asset. The numbers should speak for themselves, especially if you add something like, "Since the likely outcome of the trustee's forced sale is likely to be a negative outcome for the bankruptcy estate, the only reasonable inference that can be drawn is that the trustee has a wrongful motive -- something other than the interest of the creditors."
That's how I would characterize the circumstances. Frankly, when I see some schmuck trying to show his/her ass in court, I immediately call BS. Most of the time, bullies back down as soon as they are suitably embarrassed.
Hope this helps.
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