EXEMPTIONS

Judge Opperman, in the case of In re Miller, Case No. 11-21722-dob, Eastern District of Michigan, Northern Division, recently determined that a bankruptcy debtor's exemptions are not available to recover value created by a bankruptcy trustee. In this case, the trustee negotiated a settlement with a secured mortgage holder under which the mortgage holder agreed to accept less than the full amount of its secured indebtedness from sale of the property.

Because all of the proceeds were not going to a secured creditor, the debtor claimed that the money received by the trustee should be paid to the debtor to satisfy the debtor's exemptions and filed a motion for abandonment of the funds to accomplish that purpose. The bankruptcy court ruled against the debtor on this bankruptcy question and ruled that the funds remain property of the bankruptcy estate, free of the debtor's claim of exemptions.

Henry Knier

Smith, Martin, Powers & Knier, P.C.