Can Someone Sell His or Her Car After Filing?

[Ablazed]

I hope this is not a stupid question but I am curious. Lets say you have a car that was exempt and that you filed Chapter 13 and have already started your payment plan.

You then decide to sell the car because you can actually walk to work. What happens to the money? Can you keep it or do you have to report the sale of the car to your trustee?

Regards,
8^)

[justbroke]

Good question. I really have no opinion on this. Of course, you would need to seek permission of the Trustee/Court in order to sell the item. The problem could come with receiving cash from the sale and strange interpretations of "income" while in a pending Bankruptcy under a Chapter 13.

[daytona]

I don't believe you have to get permission to sell anything...provided the "asset" was disclosed in your CH13 filing. My understaning is you only have to get permission to aquire new Debt, Ie a new car loan, etc. You don't even have to get permission to buy a new car if you pay cash for it.

[justbroke]

I don't believe you have to get permission to sell anything...provided the "asset" was disclosed in your CH13 filing. My understaning is you only have to get permission to aquire new Debt, Ie a new car loan, etc. You don't even have to get permission to buy a new car if you pay cash for it.

Well, you do need to be careful. If it's before confirmation, it's pretty much discouraged because the property is still property of the Bankruptcy Estate. You're right that you wouldn't need permission to spend cash on a new car, but you do need permission to sell any property pre-confirmation.

Now the overwhelming majority of Chapter 13 Plans have a provision that revests the property back to the debtor upon confirmation. Only in those strange cases where the property doesn't revest by the plan would the property still belong to the Estate post-confirmation. Again, the overwhelming majority revests the property back to the debtor per the bankruptcy code (11 USC 1322).

So, my answer would change pre/post-confirmation and based on your confirmed plan's language.

As I wrote before, I really have no opinion on this. The person should make sure the property has already revested to them or that the Trustee has abandoned the property... whichever comes first.

[Billssuck]

My confirmation paperwork says that I cannot sell any property or assets during our chapter 13 unless we get the approval of our trustee...

[walkthaplank]

In my paperwork it says I have to get permission from the court to sell assets, not the trustee. In the trustee's handbook it specifically says permission from the court (not the trustee) is required to buy or sell assets. I imagine in that court order it lays out what happens with the proceeds.

[secondtime2]

Is there a dollar limit you must inform? or is just ANYTHING? Do I have to report I sold a $100 item?

[justbroke]

Is there a dollar limit you must inform? or is just ANYTHING? Do I have to report I sold a $100 item?

It depends on what's in your confirmation order. Generally, $100 item is nothing you need to ask permission for. I believe that permission to sell is for larger items, like cars and your home.