Section 3.10 Generally

• Library: Bankruptcy Practice (2007 Ed. + 2015 Cum Supp)

1. (§3.10) Generally

Property acquired by an individual Chapter 7 debtor after the filing date, presumably purchased with money earned after the filing date, is not property of the estate. Under 11 U.S.C. § 541(a)(6), a specific exclusion is included for “earnings from services performed by an individual debtor after the commencement of the case.” This cutoff is not applicable, almost by definition, in Chapter 11 business reorganization cases, which must rely on postpetition income to fund the reorganizations.

But in an individual’s Chapter 11 case, the debtor’s postpetition wages are not specifically brought back in as property of the estate, as in Chapter 12 and Chapter 13. Some courts, therefore, will not approve a reorganization plan that relies on such postpetition earnings. See, e.g., In re Flor, 166 B.R. 512 (Bankr. D. Conn. 1994) (denying confirmation of a plan funded by future earnings). This has changed under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), Pub. L. No. 109-8, 119 Stat. 123. See §3.11, infra. In Chapter 12 and Chapter 13 cases, postpetition earnings are...