Class action lawsuit might pay long after closing - could it be confiscated?

[joshuagraham]

Class action lawsuit filed before Chapter 7 filing might pay long after closing - could it be confiscated?

I was part of a class action lawsuit before filing for Chapter 7. At the 341 meeting, the trustee asked if I had any pending lawsuit, and I mentioned it (it was due to a big event that he certainly knew about), and I think that I even gave him a copy of the letter from my attorney representing me in the lawsuit. I got the discharge and the case was closed, and I didn't notice any reference to this lawsuit as something that would be considered in the bankruptcy estate. The closing was over 5 years ago. Should I be considered that a payout from this lawsuit could be confiscated?

[justbroke]

joshuagraham could it be confiscated? That's not the term we use. Any entitlement to any award in any court proceeding which occurs prior to filing is simply "property of the bankruptcy estate". In other words, it's like cash sitting in a bank as far as the bankruptcy estate, trustee, judge and the law are concerned. You disclosed the entitlement and potential proceeds to the Trustee and creditors, which is required by the code.

In your case, it appears the Trustee abandoned the asset (the potential proceeds from the class action suit). In this case, when the case closed and the Trustee filed a report of no distribution and/or specifically abandoned the estate, that property returned to you and is no longer property of the bankruptcy estate.

Quite simply put, the Trustee abandoned the potential proceeds of the lawsuit. You would not need to turnover the proceeds. You have an offense to any attempt by any Trustee to try to claw back these proceeds since they were abandoned (and it is way beyond the period to re-open a case unless there was outright fraud).

No worries.