Journal Issue:
Agricultural Law Digest: Volume 21, Issue 2

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Cases, Regulations, and Statutes
( 2010-01-22) Achenbach, Robert ; Iowa State University Digital Repository
Traps in Abandonment of Property in Bankruptcy
( 2010-01-22) Harl, Neil ; Iowa State University Digital Repository

The economic downturn since 2007 and the rising tide of bankruptcies have focused attention on the consequences of abandonment in bankruptcy.1 While bankruptcy law in the United States (in contrast to the treatment in some other countries) has long assured individual debtors a “fresh start” in life following bankruptcy,2 with such debtors in liquidation bankruptcy (Chapter 7)3 as well as reorganization bankruptcy4 generally eligible for discharge of debt, the way abandonments in bankruptcy are handled under prevailing case law5 interferes substantially with the vaunted fresh start after bankruptcy.6 A 1989 letter ruling issued by the Internal Revenue Service7 on the handling of abandoned assets which are subjected to foreclosure or other creditor action in the hands of the debtor contributes to the burdens of a debtor and further interferes with the debtor’s fresh start.