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Proceeds from a car accident settlement for an accident that occurred after the Chapter 13 filing are not part of bankruptcy estate upon conversion to Chapter 7

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In re Love, 2019 WL 2427198 (Bankr E.D. Va., 2019)(Huennekens, J.)

Debtor was in a car accident two years after filing Chapter 13 case.  Debtor voluntarily converted Chapter 13 to Chapter 7 and received a discharge.  Debtor never amended their schedules to disclose personal injury claim arising out of automobile accident.  Debtor filed a motion to reopen bankruptcy case and amend her schedules to add personal injury claim and exempt it from the bankruptcy estate. The Trustee filed an Objection to the Debtors Exemption of Personal Injury Claim arguing that upon the reopening of the case, the property became part of the bankruptcy estate.  The Debtors filed a response requesting that the Court for the Trustee to abandon the debtor’s personal injury proceeds.

The Court held that “Absent a bad faith conversion, §348(f) limits converted Ch. 7 estate property to property belonging to the debtor as of the date the original Ch. 13 petition was filed.” Harris v. Viegelahn, 135 S. Ct. 1829, 1837 (2015). The personal injury claim arose after the filing of the Ch. 13, therefore it is not possible to find that the claims at issue here were ever part of the Ch. 7 estate. Thomas v. FTS USA, LLC, 193 F. Supp. 3d 623, 640 (E.D. Va. 2016) Because the personal injury claim is not property of the bankruptcy estate, there is nothing to for the Trustee to abandon and the Debtor is entitled to the fully amount of the settlement proceeds realized from the personal injury claim.

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