Legal Question in Bankruptcy in Kentucky

Post-Bankruptcy Filing Sales Commissions

1. Can a voluntary Chapter 7 bankruptcy petitioner keep sales commissions that are paid at a closing occurring (less than one month) after the filing of the bankruptcy if the amounts fall outside the claimed exemptions? (2) If not, can the bankruptcy trustee gain access to this petitioner's bank account if the cash in the account exeeds the stated amount of the exemptions?


Asked on 6/28/02, 9:09 pm

1 Answer from Attorneys
E. Brian Davis Davis Law Office

Re: Post-Bankruptcy Filing Sales Commissions

There are not enough facts to give a definitive answer.

However, one key element will be when the commissions were

earned (not paid). If the work was done, and the person

was entitled to the money, before the bankruptcy was filed,

then the right to the money is property of the estate. Property

of the estate in a Chapter 7 bankruptcy "belongs" to the trustee

unless it is exempt. One of the most important things a bankruptcy

attorney does (or should do) is use the permitted exemptions in the

best way possible for the debtor.

If the money is property of the estate, then the trustee can demand that

the debtor pay it to the trustee; if the demand is ignored, the trustee

can sue the debtor for the money in bankruptcy court.

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Answered on 6/29/02, 12:08 pm


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