Inheritance Received more than 180 Days Post-Petition Part of Chapter 13 Estate

Posted by NCBRC - October 29, 2013

The Fourth Circuit found that an inheritance acquired after section 541(a)(5)’s 180 day look-back period but prior to termination of the chapter 13 case, becomes part of the bankruptcy estate under section 1306(a)(1). Carroll v. Logan (In re Carroll), No. 13-1024 (Oct. 28, 2013). The case involved the tension created by section 1306’s reference to section 541 in its definition of estate property. Section 541 generally defines the property of a bankruptcy estate by reference to interests in property at the commencement of the case.  Paragraph (a)(5) of that section expands that definitions to: “Any interest in property that would have been property of the estate if such interest had been an interest of the debtor on the date of the filing of the petition, and that the debtor acquires or becomes entitled to acquire within 180 days after such date—(A) by bequest, devise, or inheritance.” Section 1306 defines property of the chapter 13 bankruptcy estate to include “in addition to the property specified in section 541 of this title—(1) all property of the kind specified in such section that the debtor acquires after the commencement of the case but before the case is closed, dismissed, or converted.”

The court rejected the debtor’s argument that, under well-established rules of statutory construction, courts should not interpret the general language of section 1306 to eliminate the specific time constraint set forth in section 541(a)(5). See In re Key, 465 B.R. 709, 712 (Bankr. S.D. Ga. 2012) (“I find the general language of § 1306(a)(1) does not pull property expressly excluded by § 541(a)(5) into the property of the estate.”). It was also unpersuaded by the debtor’s contention that section 1306 must be read to incorporate the property included in section 541 with all of that section’s specific limitation. See In re Walsh, 07-60774, 2011 WL 2621018, at *2 (Bankr. S.D. Ga. June 15, 2011) (180 day time limitation applies to section 1306); and In re Schlottman, 319 B.R. 23, 24-25 (Bankr. M.D. Fla. 2004) (same).

Rather, the court found that section 1306(a)(1) incorporates inheritances that would become part of the estate under section 541(a)(5), because they are acquired within the 180 day look-back period, and adds to that inheritances acquired by chapter 13 debtors any time prior to termination of the chapter 13 case. See, In re Tinney, No. 07-42020 (Bankr. N.D. Ala. July 9, 2012) (collecting cases finding that section 1306(a)(1) expands section 541(a)(5)(A)’s 180 day time limit).

Carroll opinion

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One Comment

  • Posted December 22, 2014 at 4:22 am | Permalink

    Very interesting post about the 180 look back period is interesting. The analysis is well done.

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