Sep
30
2010
In re White
A Chapter 7 trustee filed an objection to a debtor's claim of exemption in a spendthrift trust, asserting that he could attach her interest, not generally, but to satisfy her student loan creditors and certain other creditors. The trustee argued that under 11 U.S.C.S. § 544(a)(1), he was entitled to step into the shoes of a creditor for the purposes of invading the trust. The debtor and a trustee under the spendthrift trust opposed the objection.
Ruling:
Trustee could not use strong-arm powers to step into the shoes of a preferred class of creditors in order to seize the assets of a spendthrift trust.
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Consumer case opionion summary, case decided on September 30,2010, LexisNexis #1110-054