There are several key aspects to remember when you first learn about Chapter 7 bankruptcy. These terms are essential to understand and will help you see the process and the people involved.
Must Read: https://www.lawsure.us/bankruptcy-in-llcs/
Person: The Case Trustee
The U.S. trustee (or Bankruptcy Court in Alabama or North Carolina) will appoint an impartial trustee to manage the Chapter 7 petition. They will assist you in liquidating your non-exempt assets.
If your assets are all exempt from valid liens or not subject to them, the trustee will usually file a “no-asset” report with court and no distribution will be made to unsecured creditors. Chapter 7 cases involving individuals debtors are almost always non-asset cases.
Process: The role of the Case Trustee
Chapter 7 trustees are responsible for liquidating your assets and maximizing the return to your creditors. If you are:
Never Miss: https://www.lawprofessional.us/debt-repayment/
- It is exempt from liens, provided that the property isn’t exempt.
- It is more valuable than any security interest or lien attached the property, and any exemption the debtor has in the property
- Under the trustee’s “avoiding power”, the trustee can also seek to recover money and property. The trustee has the ability to:
- Preferential transfers to creditors made within the last 90 days of the petition must be set aside
- Remove security interests and other prepetition transfer of property not completed under nonbankruptcy law as of the filing date
- You can pursue nonbankruptcy claims, such as fraudulent conveyance or bulk transfer remedies that are available under state law
If the debtor is a company, the bankruptcy court can authorize the trustee for the operation of the business for a restricted period of time, provided that creditors are benefited and the estate’s liquidation is enhanced. Businesses might want to file Chapter 11.
Unsecure creditors must file claims with the court within 90 day of the first meeting of creditors, even if the case is a “asset” case. However, a governmental unit has 180 days to file a claim from the date that the case was filed.
The typical Chapter 7 case with no assets will not require creditors to file proofs. There will be no distribution. The Bankruptcy Court will notify creditors if the trustee recovers assets to distribute to unsecured creditors.
Also Read: https://www.lawhelps.co.uk/bankruptcy/
A Chapter 7 case does not require a secured creditor to file proof of claim to protect its lien or security interest. However, there could be other reasons for filing a claim.
Term: The Bankruptcy Estate
An “estate” is created when a bankruptcy case is filed. Technically, the estate becomes the temporary legal owner for all debtor’s property. It includes all legal or equitable rights to your property at the time of the case. This includes property owned by the debtor or property held by another person. In general, creditors of debtors are paid out of nonexempt estate property.
Process: Distribution of estate property
The Bankruptcy Code governs how property is distributed. The Code defines six types of claims. Each class must be fully paid before any lower classes can be considered.
Only the debtor will be paid if all other claims are paid in full. The trustee is responsible for disposing of the estate assets. However, the debtor does not care about the payment of debts that are not dischargeable in bankruptcy cases.
In a Chapter 7 case, the primary goals of each debtor are to keep exempt property and to get a discharge that covers as many outstanding debts as possible.
Questions about your Chapter 7 Trustee, Bankruptcy Estate, or Claims?
It can be extremely stressful and confusing to deal with bankruptcy issues. A professional can guide you through the process, and make sure you have all of the legal protection.
Most Popular: https://www.preferlaw.co.uk/bankruptcy/
To learn more about how a bankruptcy attorney can help you fix your financial problems, and get you on the right track to a fresh start, contact them.