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#2252 signed 6-25-96

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF KANSAS

In Re:

JEFFREY SCOTT HANNER,

JOY ELIZABETH HANNER,

DEBTOR(S)

NO. 96-41136-7

CHAPTER 7

ORDER DENYING DEBTORS' MOTION FOR RETURN OF GARNISHED FUNDS

This matter is before the Court on the debtors' motion for return of funds garnished prepetition. The debtors appear by counsel Lloyd R. Graham. On May 21, 1996, the motion was served on Kansas Check Associates, the United States Trustee, and Robert Baer, the chapter 7 trustee for this case, but none of them have responded to it. The Court has reviewed the relevant pleadings and is now ready to rule.

The debtors claim that Kansas Check Associates (KCA) garnished $480 from Mr. Hanner's checking account about two weeks before they filed for bankruptcy. They contend this garnishment is a preference avoidable under 11 U.S.C.A. §547(b), and ask the Court to order KCA to return the money to them. Such an action is a proceeding to recover money or property, which under Federal Rule of Bankruptcy Procedure 7001(1) must be brought through an adversary proceeding, not by motion. For either an adversary proceeding commenced by complaint or a contested matter commenced by motion, service on a party such as KCA must be directed to the attention of an officer or agent, which was not done here. Fed. R. Bankr. P. 7004(b)(3) & 9014. A chapter 7 debtor probably has no authority to bring a preference action anyway, at least not solely for his or her own benefit. 4 Collier on Bankruptcy, ¶547.21[3] (15th ed. 1994). Furthermore, if the garnishment could be avoided, the money recovered from KCA would be property of the estate, and the debtors have not tried to claim it as exempt, nor would money in a checking account ordinarily be exemptible. Finally, the debtors' petition and schedules show that their debts are primarily consumer debts. For such debtors, section 547(c)(8) precludes the recovery of an otherwise avoidable preferential transfer of less than $600, making KCA's garnishment of $480 not recoverable.

For these reasons, the debtors' motion for return of the garnished money is hereby denied.

IT IS SO ORDERED.

Dated at Topeka, Kansas, this _____ day of June, 1996.













__________________________________

JAMES A. PUSATERI

CHIEF BANKRUPTCY JUDGE

 

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