Property Excluded from the Bankruptcy Estate - Bare Legal Title and No Equitable Interest

The bankruptcy code provides that the bankruptcy estate includes, with certain exceptions, all legal or equitable interests of the debtor as of the date of the filing of the bankruptcy case. 11 U.S.C. § 541 (a). Section 541 (d), though provides that property in which the debtor only holds "legal title and not an equitable interest"  becomes part of the estate only to the "extent of the debtor's legal title to such property, but not to the extent of any equitable interest in such property that the debtor does not hold." The district court stated that the "plain language of section 541 (d) provides that if a debtor holds only legal title to property and not an equitable interest, then the equitable interest in such property is excluded from the estate."

In the case of In re: Marcos Antonio Campuzano, Case 11-CV-22929-KAM (S.D. Fla. 2012), the district court reviewed and upheld the bankruptcy court's ruling that the involved bankruptcy debtor only held bare legal title to a certain boat.  The district court noted that this finding was supported by the unrefuted testimony of three witnesses and was therefore not clearly erroneous.  The Bankruptcy Court's ruling was based on the unrefuted testimony of witnesses, whom the court deemed credible,  that the debtor did not make any payments towards the purchase price of the boat, did not have control of the boat, did not have access privileges at the marina, did not use the boat, and did not have any interest in using the boat.  Further testimony was that the debtor agreed to put the title to the boat in his name as at the time of the purchase, the actual owner was not a permanent resident of the United States and had concerns about his ability to be on the title to the boat.

(305) 891-4055 - Jordan E. Bublick is a Miami Bankruptcy Lawyer with over 25 years of experience in filing Chapter 13 and Chapter 7 Bankrkuptcy Cases.