Creditor Claim being refunded after 4 years

[amara]

I am located in Indiana.

In 2012, I filed bankruptcy and was discharged in 2013. The DOE filed a claim in my bankruptcy and was awarded over $5,000 for student loans that have now been proven in Federal court to be fraud. The loans are being cancelled and the money refunded.

Does anyone know what will need to happen with this refund? There are over 50 students having money refunded and almost half of us having filed bankruptcy. Our attorneys have never encountered a claim being refunded years after the discharge so they aren't sure what will be happening.

Does anyone one have any insight on this?

Thanks!

[justbroke]

I have no idea. Maybe despritfreya may have some experience with such a judgement being awarded years after discharge.

[amara]

Thanks! I've tried searching and can't find anything about this. It's a rare occurrence for sure

[despritfreya]

What should happen:

1. If funds were paid out of the bk estate (asset case either 7 or 13), refund should be issued in the name of the Trustee for the benefit of the bk estate.

2. Assuming the Trustee is still around, Trustee should file a Motion to Reopen the bk for the purpose of a) depositing the check and b)redistribution.

3. Once case is reopened and Trustee is reappointed, Trustee will administer funds on a pro rata basis between all other creditors who filed claims.

4. If Trustee payments are returned (maybe because the creditor no longer exists) the returned funds will be redistributed to the remaining creditors.

5. Once all funds are gone, the Trustee will have the case re-closed.

This is what probably should happen but only time will tell.

Des.