Welcome to the ILNBlog, Discussing the Northern District of Illinois Bankruptcy Court

One common issue in Chapter 13 plans is how to deal with assets of unknown value that are later liquidated to cash. The personal injury lawsuit that may or may not have unexempt net value, for instance. Similarly, there can be some question of what happens to the proceeds of an asset with a known value that is sold during a Chapter 13, like the sale of a home. After some recent research, I don't think many attorneys are currently handling these assets properly, including myself. One case that comes to mind is a client that wished to use a cash-out refinance of a home to fund a needed project, and we worried about the Trustee wanting some of the funds paid into the plan. I make the argument to a colleague that the Debtor had already paid into the plan a large sum of money. The amount of the cash out actually was less than the exemption, if I recall. The colleague suggested that there would be an issue with, essentially, separating the asset from the exemption. The home value w...