Bankruptcy has become quite common these days due to the increasing recession and unemployment rate. More and more people are going bankrupt because of the home loan installments or vehicle loan installments. There are many laws concerning a bankruptcy case. Most people are unaware of the steps to be taken when a Chapter 7 petition is filed. In such a petition, the US trustee announces a trustee to administer the “disinterested case”. They are also appointed to liquidate all of the non-exempt assets of the debtor. The property hence obtained is solely owned by the trustee and he or she has full rights to sell all the property.
The money hence obtained by the trustee will be used to clear the debts of all the concerned unsecured creditors. Only those creditors who give credit based on the debtor’s ability to pay them afterwards are considered. Secured creditors are those who provide credit based on their right to seize collateral by default. It is seen in most cases that the debtor has no property above the statutory exemption limit. This makes it possible for most debtors to exempt and keep all their assets secured with them. In case, if the debtor’s assets are let off or content to any valid liens, then the trustee will file a no asset report.
Hence, there will be no sharing of the debtor’s assets among the unsecured creditors. Mostly, the cases filed under chapter 7 are no asset cases. However, if the case has to be an asset case, the creditor can file a case and claim for their money. It should be done within 90 days after the first date set for the meeting of creditors. A government unit is given total 180 days from the day the case is filed for the claim. Bankruptcy trustee Ottawa expert can help you in dealing with the Chapter 7 cases of bankruptcy. In no asset cases, the creditors need not provide any proof for the claim as there will be no distribution of the asset.
In case, any asset is recovered later, the trustee can provide notice to the creditors to allow them to arrange proofs of claim. Usually, a secured creditor need not provide any proof for the claim, but there can be many other reasons to file a claim for which proof may be needed. Filing of a bankruptcy case creates a bankruptcy estate. For a temporary time period, this estate becomes the owner of all the debtor’s property. As per the commencement of the case, the property interests of debtors are equitable. It is totally a trustee’s responsibility to take care of all the non-exempt properties of the debtor’s estate.
A trustee can attempt to recover money or property under his “avoiding powers”. There are many powers that come under a trustee’s avoiding powers. It includes the power to avoid preference payments. They can also undo security interests if any. They can pursue all non-bankruptcy claims such as bulk transfer remedies or fraudulent conveyance.