Can a Chapter 7 debtor pursue a cause of action in bankruptcy if it becomes part of the bankruptcy estate?

California, United States of America


The following excerpt is from De Smidt v. Nationstar Mortg. LLC, E069887 (Cal. App. 2020):

Once a cause of action becomes part of a bankruptcy estate, the "chapter 7 debtor may not prosecute [the claim] on his or her own . . . unless the claim has been abandoned by the trustee." (Bostanian v. Liberty Savings Bank (1997) 52 Cal.App.4th 1075, 1081 (Bostanian).) "[T]he debtor must take affirmative steps to comply with [11 U.S.C.] section 554 concerning abandonment. Until the debtor secures an abandonment of the claim, the debtor lacks standing to pursue it." (Id. at p. 1083.) "Property of a bankruptcy estate can be abandoned by three methods: (1) after notice and hearing, the trustee may unilaterally abandon property that is "burdensome . . . or . . . of inconsequential value"

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