court ordered me to abandon the dinner's residence and i considered it a very valuable asset of the state to have a one hundred thousand dollars equity and it over exemptions so that's why we're here  yes that was disputed but that was my call i mean i saw there was a quickie there and they said we're not moving so a few weeks later i filed a motion to evict them because i needed to sell the property we can't close a sale down there in chattanooga and lists of houses vacant so i did not want to listed until i knew i could get them out most in or say we're here disagree with factually being applicable but if there is no equity in the house then i wouldn't be selling i mean i would you wouldn't be trying to evict them either no no no no and most houses don't have  issue and i'm saying that insolvent debtors these people were insolvent they had four hundred thousand in claims and on their petition so they're clearly insolvent did hers they don't have standing to file the motion to compel abandonment which they filed after my motion to evict ok would seem that they would have the most standing in the sense of the most personal interest so why can you make this legal argument that they don't have standing because the the test in bankruptcy is not that they have a personal interest in the outcome it is bikini area interest in the ass and that's that's the rule in this circuit else and that when you say that what about this bat case of an re morton from two thousand and three that per party and interest refers to anyone who has a practical interest in the outcome of a case i know that the cases that gives the general rules and in federal standing if you have a profound interest in the outcome that can give you standing well that's not in bankruptcy bankruptcy they limit debtors very much from interfering with the administration of the state they can't object to clients you state is for the benefit of creditors certainly right but that dinners are not supposed to interfere with the administration which is really what happened here they wrecked this estate ok so so if this is a matter of clear cut black letter law what case should we go to for that prince i think there's no case that they had it has decided this i can't find a case where someone is contended that debtors are not the parties that the statute is intended to protect these of solvent debtors are not the parties that the statute is meant to protect it i call it statutory standing and that's in my brief and i think that applies here and that's there's i don't i think it's a case of first impression across across all circuits cross the circuits i really do i can't find a case it goes either way that says they do or they don't know if there is and the key is that you're saying insolvent debtors right exactly they don't have a kunar interest in the house  line issued i don't think it's been decided across the country have found a case for a trustee actually paid them their exemption but to get them have out and i thought cut off all their standing i tendered their exemption this was a tender this wasn't an offer of judgment i tendered the check and they know we don't want so judge posner referred to a minute ago  twenty years ago would not case that if the trustee tenders the exemption to the debtors in their home he could tell them to skip dad so that's what i want this court to rule that a quote  in the debtors their water their homestead exemption that was where the trustee could charge rent but i want out of the house and i clearly had value to the unsecured creditors here the whole issue is maybe this house didn't have any value to the i had determined that it had a lot of it that was my prerogative to value or did you go wrong on that where did i go wrong yeah i did it oh you think it had value but they are the homeowners the  appraisers this is a big interesting it's valued the house time with like eighty thousand equity seventy thousand equity and then the debtor says well our there i had a home inspector no there's no mo the debtor's never proved an emo that was just it was all fake so there's there are fact questions which were resolved by the bankruptcy judge against you that's then in terms of he acts out of that but um but so i keep getting back to this legal question which you say is a new issue which why should insolvent debtors not be able to interfere as you put it with up because it gives them a turn it's basically interpreted in the statute as a turnover they have they don't have they should have a right of turnover of an asset that belongs to the state it's not whether they should think they don't if they've done that or not they're not parties in interest with that statute and they should not have standing to bring these motions so that's i hate to ask a practical question that reveals my ignorance but i will if the deaders are correct that the value of the house is exactly equal to the mortgage on the house hypothetically and if they challenge your right to evict and if they win that they cannot be compelled to abandon then who gets the house in the end what made the homestead tender but i don't understand in this hypothetical situation where the value of the house exactly equals the mortgage who and we say that the defend that the debtors had standing so they they do when their motion to compel abandonment which is what their emotions right that's right so so in the end who is it who gets the is on it and usually the dinners will leave and the secured party who who has the security in the house of the ninety one thousand or whatever it is gets the house right because it's a sick they would take  foreclosed ok but they're hoping if they want to stay in the house legitimately they're hoping that they can come up with some way of paying the mortgage company back to ninety one thousand that is owed on the mortgage house the the trial court abused its discretion in trying to value this house under the casey machine test you're supposed to just look at upside potential and this has the debtors at the hearing offered fifty thousand dollars to the estate and a chapter thirteen plan and that is significant that his head is an upside they offered and i remember their motion to compel abandonment included a motion you know or a motion to convert to thirteen so they present in the hearing we're going to give we'll give fifty thousand for our house well that's upside benefit for the a stay in the jury and that and it's just abuse of discretion to abandon that and even one of their own appraisals was one hundred twenty five which would have been plenty to administer the house question he mentions that the court abandoned the property even though the debtors i don't know what sort of debtors they were at the time but they offered thirty grand so what what what do you say to that you are this is this is if i can give a little background and give some information on that normally what happens in these cases where there is real estate there's almost never an asset most of this one did it was an s well mr john says it's an asset case judge wittenberg the judge and donna says it's not normally what happens is the house goes into bankruptcy the trustee sees there's no equity in the house he abandons the house back to the debtors often the debtors having to have a place to live and oftentimes writs less experience more or less and bits of the rent they focus on trying to keep their house current so whether the mortgage company offers them in a reaffirmation agreement or not they're current on their house when they go into bankruptcy while they're in bankruptcy and when they come out of bankruptcy and they keep their house now reaffirmation agreements are great because they give the debtor some certainty in the helping rebuild their credit but they're not necessary because the mortgage company retains the lien on the property and the debtor and the creditor are in this sort of ambiguous dance renegotiating basically staying status quo where there's no to fall yet there's no real dead left but the lien remains as far as what it is though if the reaffirmation payments are not made then the holder can go in and take the property if the state's been lifted already or if the case is over they can they had the to stay in their house the burkes had a sister who had some money so we tried for months we went just a few weeks we tried for months to negotiate this with the trustee we got an appraisal off the bat to sort of give us some guidance on what sort of bankruptcy we should file should we follow seven do we need to follow thirteen do we can we do neither so the first appraisal came back before the case at one hundred eight thousand dollars when you take the ninety thousand dollars loan against the house plus the seventy five hundred dollar homestead exemption in the theoretical cost of sales there is no equity in this house at one hundred thousand dollars as mr john and it devolved from there as far as the settlement negotiations when we were about to go to the hearings on the motion to require the debtors to vacate our motion to compel abandonment or convert we are trying to reach a settlement settlements are not uncommon in bankruptcy in fact almost everything said so the sister said she couldn't come up with twenty thousand dollars the burke said ok we can come up with the rest of it over and over a period of years in a chapter thirteen plan mr burke is in a another life time a decade ago was it was a home builder and did fairly well for himself  ten years ago the market fell to pieces and he was left with an income he in he incurred a lot of debt and some illustrate deficiencies that he was left thousand dollars from his sister and put together a chapter thirteen plan that would hopefully be enough to satisfy this trustee bear in mind we had one hundred one thousand dollar prize and we second guessed ourselves because mr john was so adamant about value we got another appraisal he came back in one hundred twenty five thousand dollars so we're sitting here saying we're more than meeting this man halfway we want to stay in our house we want this problem to go away we've got the family to help and we're going to go and drive oberl that night simply to stay in our house we have three adult children one of which has some issues mentally the other one has been through a traumatic accident and still recovering and the third one still is so we want to stay and so getting back to one of the initial points of your opponent standing he says that there's no case really of a the morton case martin where the standing is equated to a personal stake not necessarily peculiar interest i think it's important to look at five fifty four be here when i think it's in seven the trustee the trustee thought that he should be entitled to the equity built up over the course of the thirteen the court said no you can't  normally you think that that you know just in terms of somebody outside the special area of bankruptcy would think that the debtor could have standing and so i'm wondering what what is what leads the courts to go the other way to conclude that the debtor doesn't have started well your honor i don't think standard standing would even be an issue here without this novel tender exemption without that well let's i mean you got that that's what you have here right right so i mean if it's novel maybe it's clever but interesting the estate is the section of the bankruptcy code that controls here right and so you have to deal with that with this clever situation well it's clever your honor but but it's not  ok so can come from do we know they came from his pocket pocket it came from his pocket the code clearly states out it the state's going to be bar money it has to be after hearing it has to come up before a judge on a hearing where this loan is requested an approved this didn't have did you raise this issue in the bankruptcy court that the tender came from an inappropriate source i e the trustees one trustees a creature of statute and there is no statutory authority for a trustee to wind him self money is just not there  if you look at seven o four the trustee that is the numerator trustees davies the trustee is to preserve or excuse the maintain and liquidate not speculate maintain and liquidity but does the does the homestead exemption have some kind of priority such that it would be it would be proper for a trustee to make payments the homestead exemption out of whatever assets there are in the bankrupt estate even if the assets are less than the debts but there were no assets except for the house there's no asset whatsoever there's no bank account or anything nothing that wasn't exempt there is nothing to cook poor into this estate to allow him to buy the time sixteen to nothing well i'm going to ask the trustee this question so i'll ask you in advance  where in this debt you tory scheme is there i wonder about the trustee bringing this appeal is their grounds for appealing the denial of her the abandon the so what is the basis is for the appeal of your opponent obviously it's your opponent that needs to address this i'm not sure your honor trustee handbook also says the debtor must maintain or must come into a case in a with a position of being this interest interested now obviously he was disinterested when he came into the case but by trying to insert his own funds seventy five hundred dollars his disinterested miss goes out the door he's no longer disinterested but it was five hundred bucks and seventy five hundred dollars ok yes out of his own pocket to try t motivation i think that he could you want to think that his motivation was that if he could take a half ass get these debtors out clean it up put some money commission or not and any get to seventy five hundred bucks back at the store well you didn't have to cough it up in the first place but and he has a he has an estimate of the value of the house that it's two hundred thousand so this is not high in the sky kind of thing from his perspective well i think maybe your honor after after hearing all the testimony of the trial court level i believe that even his own witnesses came off this two hundred thousand dollars so the only one stuck on two hundred thousand at this point is mr jo like your personal interest what interest are you advocating for the state so the creditor is for the creditors totally for the creditors but you thought that they could ok you this is this your duty bound to look for money for creditors i understand that and i know i've been doing this for forty years and i know that the debtors had these fake contractor repair estimates which the just deduct if they appraise a house like that one eighty right you don't know i didn't buy the idea that they are right so really the this house is a two hundred thousand our house it's probably worth more than that now it's very desirable that that's my prerogative to do what remedy can you expect this court if from this court if there if the court reverses the district court where where do you say the remedy goes with the rim where is the house been all this time let me say been ok i want to i want them to move out and please let me so house you say my house i thought i heard you say the house ok you let me address some things important quick because judge gilman you're focused on what the court found is value there really should not have been a valuation hearing that all these these this if this if i'm wrong about standing in this in this hearing would take place the trial court is not to find a value a number of courts do they think that they're supposed to value the house like it's a chapter eleven collateral hearing you're supposed to look for upside potential what is the upside potential and you should make the estate have to hire experts and you're going on and a pink advance of a question i need to ask you before you sit down ok where is the authority for you to get pay money out of not out of the state that's an important question i ok it bothers me a good bit i can go to the trustees advance money in these states all the time where's the authority i'm looking for the it the section of the bankruptcy code that permits the trustee to do that when it's not it's not the borrow money section that's where if we're running a business we can borrow money we to advance money all the time and the and as expense we pay for insurance out of the estate not out of oh no we advance it ourselves there's no money in these still typically get in the business of of up trying to make that sale by pay i mean this estate was in crisis these people caused it and i did have some i usually don't do and that is advance the homestead to these people but it was your own personal fund or is my money i never could get it back but then should cut him off at the pass i should get possession of the house and you know the recording nord right now you're out seventy five hundred dollars of your own money would be that in take it didn't except that it was a valid tender thank you but you're saying just just to clarify one point you just made you said that trustees frequently will make insurance payments so clearly houses have to be insured in case there's a fire or storm or something like that and and it trustees usually doing it out of their own money to do it with out of our own money we don't and it would later we get approval from the court to to pay it back we we do that but we do it we do it without haskin i mean this is something tween us in the us trustee and it's not an issue we advance money also i've danced money for debtors to move out over council saying you couldn't do it i just you heard counsel say it's not permit ask questions and i would say that the dinners gotten a windfall in this case and and and it should be reversed thank you thank you both for your argument the case to be submitted