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Abandonment Not Automatically Revoked by Reopening Case

Abandonment Not Automatically Revoked by Reopening Case

In the event an asset is abandoned by a Chapter 7 trustee, the abandonment is not automatically revoked by the Trustee’s reopening of the bankruptcy action. In the case of In re Reilly, the bankruptcy trustee appealed the abandonment of a Tevis claim by the trustee during a prior bankruptcy proceeding. The bankruptcy court ruled that a technical abandonment is irrevocable, in the same manner as if a notice of abandonment was filed. The practice of reopening bankruptcy when closed would have the opposite effect of the intent of bankruptcy which is to close all matters and give the debtor a fresh start following the most equitable distribution possible to the creditors. On appeal, the Appellate Court ruled that there is no automatic revocation of abandonment in the event a bankruptcy is reopened. The Appellate Court decided that Federal Rule of Civil Procedure 60(b) must be applied to determine whether to revoke a technical abandonment and remanded the case for consideration of the rule. Under F.R.C.P.60(b), grounds for relief from a judgment, order or proceeding may stem from: (1) mistake, inadvertence, surprise or excusable neglect; (2) newly discovered evidence that, with reasonable diligence, could not have been discovered in time to move for a new trial under Rule 59(b); (3) fraud, misrepresentation, or misconduct by an opposing party; (4) the judgment is void; (5) the judgment has been satisfied, released, or discharged; it is based on an earlier judgment that has been reversed or vacated; or applying it prospectively is no longer equitable; or (6) any other reason that justifies relief. It is critical that the bankruptcy trustee consider all matters in order to ensure that the debtor receives a final discharge and obtains the true value of the fresh start they seek. If you are considering bankruptcy you should consult with an experienced bankruptcy attorney immediately in order to protect your rights. For more information regarding foreclosure, bankruptcy or other consumer debt matters in New Jersey visit TheNJBankruptcyAttorney.com. This blog is for information purposes only and in no way is intended to replace the advice of an attorney regarding your specific matter. Our law firm is a debt relief agency and helps people file for bankruptcy relief.

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