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I paid in money to the trustee in my Chapter 7 because of unexempt assets. What happens to my money?

 

A:

I paid in money to the trustee in my Chapter 7 because of unexempt assets. What happens to my money?

First, what are assets? Assets are items belong to or owed to you at the time your bankruptcy case was filed. There are exemptions for protect most property however sometimes there is unexempt assets that require the Debtor to either turn over property to the estate or funds to the estate. If property is turned over to the trustee the trustee then must go through the process of selling the asset so that the proceeds from the sale can be distributed to your creditors.

When there are unexempt assets and funds to be distributed to the creditors there is a process the trustee must go through in disbursing the funds and ultimately recommending discharge. Asset cases remain open long enough for the trustee to liquidate/sale unexempt assets, distribute the proceeds to your creditors, file a report with the court detailing what was disbursed to who, etc. If the trustee cannot sell an asset the trustee may choose to abandon the asset which means that the Debtor owns the property again.

The whole process of distribution is referred to as the administration of the estate. This process can often take a long time, sometimes even years, depending on the type of property and assets that are involved. Something that can be an asset that many Debtors to not realize is money that is owed to them on the day of filing even if the money is not yet collected. If someone owes a Debtor money when the bankruptcy is filed, the trustee can sue that person to try to collect the money to distribute it to the Debtors creditors. If the Debtor has already started suing someone to collect money owed to them, the trustee can take over the lawsuit on the Debtors behalf in an effort to obtain as much money as possible for distribution.

All of the steps mentioned above take time. Each trustee has many cases so you can imagine all of the work involved when a trustee has multiple asset cases at one time. However, the fact that the case is still open does not mean that your discharge is hanging somewhere in the future. Often times you will still receive your discharge as scheduled (usually 60 days after the 341 meeting), while this can be revoked at any time for failure to continue to cooperate with the trustee.


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