In the

United States Court of Appeals

For the Seventh Circuit ____________________

No. 17-1766

IN RE:

TIMOTHY H. THORPE,

Debtor.

JEANA K. REINBOLD, as Chapter 7 Trustee

of the Estate of Timothy H. Thorpe,

Plaintiff-Appellant,

v.

BELVA J. THORPE,

Defendant-Appellee.

____________________

Appeal from the United States District Court 

for the Central District of Illinois.

No. 4:16-cv-04041-SLD — Sara Darrow, Judge.

____________________

ARGUED SEPTEMBER 18, 2017 — DECIDED JANUARY 31, 2018

____________________

Before BAUER, FLAUM, and SYKES, Circuit Judges.

SYKES, Circuit Judge. Timothy and Belva Thorpe married 

in 1986 and bought a house together in Illinois in 1987. They 

lived in that home until shortly after Belva filed for divorce 
2 No. 17-1766

in October 2012. Timothy then filed for bankruptcy protection in June 2013. Finally, a month later, an Illinois divorce 

court awarded Belva the marital home. Belva and the trustee 

of Timothy’s bankruptcy estate now find themselves in a 

years-long dispute about whether the divorce court’s award 

should stand.

Rounds of litigation below have narrowed this appeal. It 

is undisputed that at the moment Belva filed for divorce, 

§ 503(e) of the Illinois Marriage and Dissolution of Marriage 

Act, 750 ILL. COMP. STAT. 5/501–5/516, granted Timothy and 

Belva contingent rights in the entire house. The parties 

further agree that the estate acquired Timothy’s half-interest

in the marital home at the moment he declared bankruptcy.

The sole dispute here is whether the estate took Timothy’s

half-interest subject to Belva’s contingent interest. If it did, 

the divorce court’s award divested the estate of any right to 

the house. If it did not, the divorce court had no authority to 

strip the estate of Timothy’s half-interest.

The trustee asks us to adopt the latter position. Her argument relies on the second sentence of § 503(e), which 

provides that contingent interests in marital property “shall 

not encumber that property so as to restrict its transfer, 

assignment or conveyance.” Id. § 5/503(e). She claims that

Belva’s contingent interest must have disappeared when 

Timothy declared bankruptcy because otherwise the contingency would impermissibly restrict the transfer of the halfinterest to the estate.

This argument has yet to find any takers. The bankruptcy 

judge did not address it because he found that § 503(e) did

not apply to jointly held property. The district judge disagreed and found that § 503(e) did apply, but she concluded 
No. 17-1766 3

that Timothy’s estate took his half-interest subject to Belva’s 

contingency without discussing the statutory text at any 

length.

We affirm the district court, albeit with more meat on the 

bones. The plain statutory text demonstrates that the bankruptcy estate took Timothy’s half-interest in the marital 

home subject to Belva’s contingent interest. Nothing in the 

Illinois Dissolution of Marriage Act or federal law suggests a 

contrary holding. Accordingly, the divorce court divested 

the estate of all rights to the marital home when it awarded 

the house to Belva.

I. Background

Timothy and Belva Thorpe married on December 6, 1986. 

They purchased a house the following July by warranty 

deed, which identified them as joint tenants. This meant 

Timothy and Belva each owned a half-interest in the shared 

home that either of them could convey without the consent 

of the other. See Snyder v. Heidelberger, 953 N.E.2d 415, 420 

(Ill. 2011).

On October 6, 2012, Belva filed for divorce. This was followed by Timothy’s petition for bankruptcy protection 

under Chapter 7 on June 21, 2013. The filing of the bankruptcy petition caused an automatic stay to issue on the divorce 

proceedings then pending against Timothy. See 11 U.S.C. 

§ 362(a)(1). The Illinois divorce court continued to adjudicate

issues as they arose in the Thorpe divorce, but it could not 

enter judgment while the stay was in effect. 

On July 31, 2013, the divorce court issued a written order 

finding that Belva had established grounds for divorce. The 

court then awarded the marital home to Belva free and clear 
4 No. 17-1766

of Timothy’s claims because he had dissipated $98,000 in 

marital assets. Final judgment was entered on June 2, 2015, 

after the bankruptcy court modified the automatic stay to

permit the divorce court to enter judgment on the 2013 

order.

This litigation commenced on November 10, 2014, when 

the trustee of Timothy’s bankruptcy estate filed an adversary 

proceeding against Belva in the bankruptcy court. The 

trustee sought to undo the divorce court’s award and exercise her right to sell Timothy’s half-interest to settle the 

estate’s debts. See 11 U.S.C. § 363(h). The parties each moved 

for summary judgment after the final entry of the divorce 

court’s order in 2015.

The bankruptcy court entered judgment for Belva. According to the court, § 503(e)’s legislative purpose “was to 

enable divorce related property transfers of separately owned 

property to be treated as nontaxable events by the IRS.” In re 

Thorpe, 546 B.R. 172, 181 (Bankr. C.D. Ill. 2016) (emphasis 

added). The bankruptcy judge reasoned that because the 

asset at issue was a jointly held home, § 503(e) did not apply.

The judge then found for Belva on other grounds not relevant here.

The district judge disagreed but affirmed nonetheless. 

She noted that a joint tenant could convey his interest to a 

third party and thereby trigger a taxable event. Section 

503(e)’s purpose was thus implicated by the transfer of a 

half-interest in a joint tenancy. The judge then concluded 

without discussion that the transfer of Timothy’s halfinterest to the bankruptcy estate was encumbered by Belva’s 

contingent interest. This ultimately meant that the divorce 
No. 17-1766 5

court’s award divested the estate of any claim it had to the 

marital home.

The trustee disagrees and brought this appeal. She contends that the estate took Timothy’s half-interest in the 

marital home free and clear of Belva’s contingent interest.

II. Discussion

The trustee argues that the bankruptcy and district judges incorrectly interpreted § 503(e) of the Illinois Dissolution 

of Marriage Act. This is a question of law that we review de 

novo. See In re Kempff, 847 F.3d 444, 448 (7th Cir. 2017). Our 

analysis rests on the plain statutory text. See In re Bronk, 

775 F.3d 871, 876 (7th Cir. 2015) (“Venturing into legislative 

history [is] unnecessary” when statutory text is clear.).

At bottom this case asks us to determine what Timothy’s

bankruptcy estate currently owns. Federal law provides that

a bankruptcy estate “is comprised of ... all legal or equitable 

interests of the debtor in property as of the commencement 

of the [bankruptcy] case.” 11 U.S.C. § 541(a)(1). This means 

that “a bankruptcy trustee succeeds only to the title and 

rights in property that the debtor had at the time she filed 

the bankruptcy petition.” In re Sanders, 969 F.2d 591, 593 (7th 

Cir. 1992). These property rights “are created and defined by 

state law,” not federal law. Butner v. United States, 440 U.S. 

48, 55 (1979).

The parties rightly point us to the Dissolution of 

Marriage Act as the relevant state law. Two sections control 

this appeal. Section 503(a) describes marital property as “all 

property ... acquired by either spouse subsequent to the 

marriage.” 750 ILL. COMP. STAT. 5/503(a). Section 503(e) then 

explains that “[e]ach spouse has a species of common own-
6 No. 17-1766

ership in the marital property which vests at the time dissolution proceedings are commenced.” Id. § 5/503(e).

These provisions quickly resolve at least the threshold 

question that puzzled the lower courts. The Thorpe home is 

clearly marital property; it was acquired after Timothy and 

Belva were married. Moreover, § 503(e) applies to marital 

property by its plain terms. The Thorpe home thus falls 

within § 503(e)’s reach.

What “species of common ownership” means is a more 

esoteric question. Unlike community-property states, Illinois 

law does not establish independent ownership interests in 

marital property at the moment it is acquired. Nor does

Illinois wait to establish such interests until the divorce court 

issues a final order. Instead, Illinois occupies a middle 

ground. Divorcing spouses are vested with independent 

contingent interests in all marital property at the moment a 

divorce petition is filed. When the divorce court eventually

divides marital property, the obtaining spouse’s contingent 

interest in that property ripens into a full ownership interest.

Conversely, the spouse who is not awarded the property 

sees his contingent interest vanish.

These basic principles of law apply neatly here. When 

Belva filed for divorce, she and Timothy were each vested 

with contingent interests in the entire marital home. 

Timothy thus no longer owned a simple half-interest in the 

house. Instead, after the divorce proceeding was initiated, he 

owned a half-interest subject to Belva’s contingent interest.

This qualified half-interest is what the estate acquired when 

Timothy filed for bankruptcy less than a year later. Finally, 

once the divorce court awarded Belva the entire marital 
No. 17-1766 7

home, the estate’s contingent interest in the house disappeared. That leaves the estate without a claim.

The trustee urges us not to adopt this reasoning or result. 

She maintains that § 503(e) has more to say on the subject. In 

the second sentence, § 503(e) provides: “Any [contingent] 

interest in marital property shall not encumber that property 

so as to restrict its transfer, assignment or conveyance.” The 

trustee argues that Belva’s contingent interest is an impermissible encumbrance because it reduces the market value of 

the half-interest, thereby making it more difficult to sell. 

Accordingly, once Timothy’s half-interest was transferred to 

the estate, it was freed from the shackles of Belva’s contingent interest.

We cannot accept this construction. It requires us to disregard plain statutory text. Under Illinois law an encumbrance is any interest that “may subsist in a third party to 

the diminution of the value of the estate.” Brown v. Lober, 

389 N.E.2d 1188, 1191 (Ill. 1979). Belva’s interest certainly 

encumbers Timothy’s half-interest under this definition. But 

§ 503(e) does not disallow encumbrances per se. It provides 

that contingent interests “shall not encumber [marital]

property so as to restrict its transfer.” § 5/503(e) (emphasis 

added). In light of this, something more than reducing the 

value of the half-interest is required. The contingent interest 

must itself legally restrict the grantor’s ability to convey the 

underlying property. No such restriction is alleged here. 

Timothy was always free to transfer his qualified halfinterest, and he in fact did so when he declared bankruptcy.

The trustee’s argument also produces an absurd result. 

All contingent interests, by their nature, diminish the value 

of the underlying property rights to which they attach. They 
8 No. 17-1766

are all encumbrances. So under the trustee’s reading, 

§ 503(e)’s second sentence evaporates the contingent interest 

produced by its first sentence. Any spouse could sell his 

property and dissipate the funds, leaving the other spouse 

high and dry. We simply do not read statutes to simultaneously grant rights and take them away. “It is an elementary 

rule of construction that [an] act cannot be held to destroy 

itself.” Citizens Bank of Maryland v. Strumpf, 516 U.S. 16, 20 

(1995) (internal quotation marks omitted).

The trustee next argues that our reading renders other 

statutory text superfluous. She first points to the final clause 

of § 503(e), which empowers a divorce court to “specifically 

enjoin[]” divorcing spouses from transferring their qualified 

property interests. She also directs our attention to § 503(d), 

which allows the divorce court to divide marital assets in 

light of “the dissipation by each party of the marital property.” 750 ILL. COMP. STAT. 5/503(d)(2). The trustee claims that 

there is no reason to authorize the divorce court on either of 

these grounds if contingent interests survive transfers to 

third parties. An injunction would be unnecessary because 

the court could divide the marital property irrespective of

where it ultimately ended up. And dissipation would be 

similarly futile because the divorce court could always claw 

back the dissipated asset.

The trustee is incorrect on both counts. The dissipation 

and injunction remedies provide relief that the contingent 

interest cannot. Suppose, for example, that Timothy were to 

sell his half-interest to a bona fide purchaser and then 

squander his earnings from the sale. Illinois law is clear that

there would be no remedy against the third-party buyer. 

Our bona fide purchaser takes title “free of any interests of 
No. 17-1766 9

third persons,” assuming that he had no notice of Timothy’s 

shenanigans. Daniels v. Anderson, 642 N.E.2d 128, 133 (Ill. 

1994). This would leave Belva out of luck. There is no way to 

retrieve the property from wherever it might end up.

This is where the Act’s additional statutory remedies

come in. If other marital assets were still around, the divorce 

court could order an equitable division to make up for 

Timothy’s dissipation. If no other marital assets existed, an 

injunction could hold Timothy personally liable. Belva could

then attach Timothy’s nonmarital assets to make up for the 

deficiency in the marital estate. Perhaps this is not worth

much if Timothy is bankrupt, but it certainly makes Belva 

better off than having no recourse at all.

Having nothing more to say about the statute itself, the 

trustee turns to caselaw. She claims that our reading of 

§ 503(e) runs afoul of Kujawinski v. Kujawinski, 376 N.E.2d 

1382 (Ill. 1978). In that case, the plaintiff argued that § 503(b) 

of the Dissolution of Marriage Act violated the contract 

clauses of the U.S. and Illinois Constitutions. His specific 

concern was that a spouse and a third party might jointly 

hold property that a court could later distribute to the other 

spouse upon divorce. The Illinois Supreme Court found this 

worry to be misplaced. The court noted that § 503(b) did not 

divide property at all but instead helped answer the prior 

question about which property was subject to division. It 

thus could not impair a contract on its own. The court then 

concluded, as an aside, that it did not see an inevitable 

constitutional conflict because divorce courts would presumably divide marital property “so as to avoid the impairment of any contractual obligations owed to third parties.” Id. at 1387. 
10 No. 17-1766

The trustee now seeks to transform this single line of dictum into a broad proposition that divorce awards should not 

interfere with the interests of bankruptcy estates. That takes 

Kujawinski far beyond its scope. If anything, the opinion cuts 

the other way. The court specifically noted that a hypothetical third party did not need to rely on a divorce court to 

protect his contractual rights. Instead, he could bring a suit 

for damages against the nonobtaining spouse or seek to void 

the divorce award pursuant to “those limitations set by laws 

governing transfers, assignments and conveyances of such 

property.” Id. The onus thus lies on third parties to assert 

their legal rights when challenging a divorce court’s division 

of marital property.

A bankruptcy trustee has a robust tool in this regard—its 

“strong-arm” power under 11 U.S.C. § 544. This allows the 

estate to take the debtor’s property free from any encumbrance if it establishes that a hypothetical buyer without 

actual notice would have been a bona fide purchaser under 

state law. See Belisle v. Plunkett, 877 F.2d 512, 516 (7th Cir. 

1989). The trustee in this case is obviously aware of this 

federal provision; she argued about it extensively before 

both the bankruptcy and district courts. In this appeal, 

however, she has explicitly waived any argument as to her 

strong-arm power. This is a tactical decision that we will not 

question or accommodate.

Finally, the trustee warns that our reading of § 503(e) 

subverts the priorities and policies underlying the bankruptcy code. The precise contours of her challenge are unclear, 

but the central worry seems to be that bankruptcy trustees 

will no longer be free to challenge divorce awards. This

concern is overblown. As the trustee herself notes, fraudu-
No. 17-1766 11

lent transfer laws remain a viable tool to protect the estate’s 

assets. Moreover, a trustee is always free to demonstrate 

why she should be able to exercise her strong-arm power 

under § 544. These legal remedies, and others, adequately 

protect federal interests.

Ultimately it is the trustee’s reading of § 503(e) that upsets the priorities and policies underlying the bankruptcy 

code. We have repeatedly held that bankruptcy protection 

“is not intended to expand the debtor’s rights against others 

more than they exist at the commencement of the [bankruptcy] case.” Moody v. Amoco Oil Co., 734 F.2d 1200, 1213 (7th 

Cir. 1984) (quotation marks omitted). We have also explained 

that “[t]he estate’s property does not include the thing to 

which it lays claim until the matter is adjudicated or resolved by the parties.” In re Carousel Int’l Corp., 89 F.3d 359, 

362 (7th Cir. 1996). The trustee’s proposed reading of 

§ 503(e) commits both of these sins. It expands the estate’s 

rights and frustrates state-court adjudication simply because 

a bankruptcy has been filed. This creates “a windfall merely 

by reason of the happenstance of bankruptcy.” Lewis v. Mfrs. 

Nat’l Bank of Detroit, 364 U.S. 603, 609 (1961). The Supreme 

Court has firmly rejected such outcomes. We do the same 

here.

AFFIRMED.