Bearup, No. A10-00565-HAR (Bankr. D. Alaska, June 1, 2011).
In re: Bearup, No. A10-00565-HAR (Bankr. D. Alaska, June 1, 2011)
In Chapter 7 bankrup
tcy, the trustee, whose job it is to administer your case, will compile all your property to pay creditors. If the trustee believes you are hiding property or disguising property to avoid it being used in the case, he or she may challenge your classification of the property.
One such way for the trustee to challenge property is to claim that a nonprofit organization you are a part of. In this case, a married couple filed for Chapter 7 but did not tell the court that they were the founding members of a religious organization. They received their income from the nonprofit, and put every cent they had into it.
However, the nonprofit was also so intermingled with their own property and lives that it was impossible for them to claim it should be excluded from their case. For instance, they shared living quarters with the headquarters of the business, they lived off of the proceeds of the organization, and they did not seek gainful employment outside of the organization. Because of these facts, the trustee successfully challenged their characterization of the organization as a nonprofit, and the property of the organization was used to pay creditors.
Stephen M. Trezza
