What does “Abandonment” mean?
If a chapter 7 debtor owns real estate, the trustee must determine if he can sell or abandon his right to the property.
The trustee will perform a liquidation analysis to determine if thee is sufficient equity in the real estate that will allow him to sell the property. If the trustee determines that the real estate has no value or inconsequential value to the bankruptcy estate, he must notify the court of same. The trustee’s notice to the court that he is abandoning his right to the real estate is called a Notice Of Proposed Abandonment.
The trustee abandoning real estate is good for the debtor, not bad. This means that the trustee does not want anything to do with the property and he is abandoning his right to the property. This does not mean that the debtor must abandon the property. When the trustee abandons his right to the property, the property comes out of the bankruptcy estate and vests with the home owner(s).
What is the reason for such notice? The trustee is required to forward the proper notice to the court with a copy to the debtor and all interested parties. Although extremely unusual, any party has a right to file an objection to the trustee’s right to abandon the real estate. If no objection is filed with the court upon a certain date, the abandonment takes effect prior to the scheduled court date.
Please do not rely on this blog. You must contact your attorney to discuss this very important matter.
You may contact New Jersey bankruptcy lawyer Robert Manchel at (866) 503-5655 to discuss your personal situation and how bankruptcy protection may apply in your individual case.