Bankruptcy Forms: Filing Bankruptcy Chapter 7 Bankruptcy Software Chapter 13

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TITLE 11–BANKRUPTCY

CHAPTER 5–CREDITORS, THE DEBTOR, AND THE ESTATE

Sub Chapter III – The Estate

Sec. 551. Automatic preservation of avoided transfer


    Any transfer avoided under section 522, 544, 545, 547, 548, 549, or 
724(a) of this title, or any lien void under section 506(d) of this 
title, is preserved for the benefit of the estate but only with respect 
to property of the estate.

(Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2602.)


                      Historical and Revision Notes

                         legislative statements

    Section 551 is adopted from the House bill and the alternative in 
the Senate amendment is rejected. The section is clarified to indicate 
that a transfer avoided or a lien that is void is preserved for the 
benefit of the estate, but only with respect to property of the estate. 
This prevents the trustee from asserting an avoided tax lien against 
after acquired property of the debtor.


                        senate report no. 95-989

    This section is a change from present law. It specifies that any 
avoided transfer is automatically preserved for the benefit of the 
estate. Under current law, the court must determine whether or not the 
transfer should be preserved. The operation of the section is automatic, 
unlike current law, even though preservation may not benefit the estate 
in every instance. A preserved lien may be abandoned by the trustee 
under proposed 11 U.S.C. 554 if the preservation does not benefit the 
estate. The section as a whole prevents junior lienors from improving 
their position at the expense of the estate when a senior lien is 
avoided.

                  Section Referred to in Other Sections

    This section is referred to in sections 106, 522, 541, 901 of this 
title.


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Legal Resource Center: United States Code TITLE 11 Filing Bankruptcy Forms Software