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Virginia Chapter 7 Bankruptcy Lawyer Filing Voluntary Petition Employment


Chapter 7


June 1, 2010, Decided

The debtor received a discharge on January 11, 2010. In response to a motion by Capital One, as successor to Chevy Chase, for relief from the automatic stay to enforce a deed of trust against a condominium unit she owns, the debtor asserted that Chevy Chase–which was also the institution where she banked and kept a safe deposit box–had essentially driven her into bankruptcy by, among other things, allowing a document crucial to the arbitration of her employment termination to be removed from her safe deposit box at the bank.  She ultimately amended her schedule of assets on April 9, 2010, to list $4 million in tort claims against Chevy Chase.  The current trustee–the third to serve in the case –filed a notice on April 14, 2010, of his intent to abandon the claims. Two proofs of claim have been filed for student loan debt, one in the amount of $331,073.25 and the other in the amount of $333,140.37.


Whether the trustee’s is authorized to abandonment of tort claims?

It was held that “A trustee, however, is not required to administer property simply because it is part of a bankruptcy estate and may, after notice and a hearing, abandon property that is burdensome to the bankruptcy estate or that is of inconsequential value and benefit to the estate. § 554(a), Bankruptcy Code.  The effect of abandonment is to leave unaltered the prepetition interests in the property.  Thus, where the property at issue consists of a cause of action belonging to the debtor, the debtor is free to prosecute it.  Because abandonment simply returns property to the debtor, ordinarily the debtor would have no standing to oppose it.  But in this case, given the existence of a large student loan debt that will–to the extent not paid by the trustee–likely survive the debtor’s discharge, the court concludes that the debtor has a direct financial interest in how the estate is administered sufficient to confer standing”.

While a chapter 7 bankruptcy trustee must be even-handed and fair with respect to the interests of the debtor, the trustee is not the debtor’s champion and is under no duty to right wrongs or pursue claims simply because the debtor would like to seem them pursued or cannot find an attorney willing to represent her. As the Supreme Court has observed, “The trustee in bankruptcy is not obliged to maintain or continue every cause of action which the bankrupt may have.” Mayer v. Fleming, 327 U.S. 161, 166 n.9, 66 S. Ct. 382, 385 n.9, 90 L. Ed. 595 (1946).  In pursuing a debtor’s claims, the trustee does so for the benefit of the creditors, not the debtor.  Although Dr. Najafian no doubt sincerely feels that she has been wronged by Chevy Chase, a strong belief in the justice of one’s cause does not necessarily equate to a meritorious case.

The Court held that for the foregoing reasons, it is ordered that the debtor’s objection to the proposed abandonment of her tort claims against Capital One, N.A., as successor to Chevy Chase Bank, FSB, is overruled, and the trustee is authorized to abandon the claims, without prejudice to the debtor’s right to prosecute such claims in her own right.


These summaries are provided by the SRIS Law Group.  They represent the firm’s unofficial views of the Justices’ opinions.  The original opinions should be consulted for their authoritative content.

About the Author:
The SRIS Law Group Virginia bankruptcy lawyers assist clients with Chapter 7 Bankruptcies in Virginia.  Our Virginia bankruptcy attorneys help clients decide if they need to file for a bankruptcy.  The SRIS Law Group has offices in Fairfax, Richmond, Virginia Beach, Lynchburg, Fredericksburg, Loudoun & Prince William.
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