Court could Grant Chapter 13 Debtor Derivative Standing to Pursue Preferential Avoidance Action that would Benefit Estate where Trustee is Unwilling to Pursue Claim

Court could Grant Chapter 13 Debtor Derivative Standing to Pursue Preferential Avoidance Action that would Benefit Estate where Trustee is Unwilling to Pursue Claim

Bankruptcy Judge Roberta Colton in Tampa started her latest opinion by declaring that “The Debtor is in a pinch.”

On the eve of filing his Chapter 13 petition, the Debtor withdrew $12,000 from his Individual Retirement Account  (IRA) and paid it to his Credit Union.

Such transfer could be an avoidable preferential transfer under 11 USC 547. However, the Chapter 13 trustee, who has standing to bring such an action, will not commit to do so.

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