Chapter 7 question

[gatekeeper]

Me and my Attorney had filed for chapter 7 bankruptcy back in September. I had my 341this past week and the trustee had stated that my refund check for the 2010 tax year has to be turn over to her office, once I filed my taxes. Everything, else was fine with no issues.

However, today on pacer I notice that the trustee has filed this report stating that "The Trustee reports that he or she now holds funds of this bankruptcy estate or expects to receive funds which should result in a dividend to creditors who were previously instructed not to file claims. The Trustee hereby requests that the Court fix the last date for filing proofs of claim and that notice be given to creditors". Also on pacer it shows this as well, "The Trustee hereby requests that the Court fix the last date for filing proofs of claim and that notice be given to creditors."

[free2breathe]

That is normal. The no-asset case has now become an expected asset case. The creditors who wish to file claims may now do so. When you turn your tax refund over to the trustee, they will disburse it according to bankruptcy rules. We are going through the same thing. It is all because your trustee expects that you will receive a tax refund that will be worth claiming as a non-exempt asset.

[gatekeeper]

So, am I still in the 60 day club (Discharge) or is the court going to delay the discharge till after the 2010 tax return is filed , or what?

[tcreegan]

Hi gatekeeper,

Should not delay your discharge, you're in the 60 day club....enjoy!

Tom in Colo

[free2breathe]

I was wondering the same thing, actually. It gets confusing at that point....debts are discharged, but paid after the fact then? Of course, that is also assuming that the refund is indeed large enough for the trustee to mess with. I'm still wondering what a trustee feels is an "adequate" amount of assets to mess with. I just know that my creditors have 90 days to file claims, and I'm hoping to have my tax refund to the trustee ASAP so I can get on with this.

[tcreegan]

Hi free2breathe, Hi gatekeeper,

The discharge is for YOU, at that point you are free to march forward into your 'fresh start'

But the debts don't just disappear, they just cant try to collect from you ever again. Several possible ways this uncollectable debt can be valuable...

1) If the trustee finds some $$ they distribute it over the creditors (it can get ridiculous, each creditor gets a check in the mail for 50 cents)

2) The creditor bundles it in with a large number of other debts and sells the bundle to a collection agency who doesn't know he has non-collectable debts in there

3) To finish the debt off, the creditor (collection agency, whoever has it last) writes it off and closes the acct for good.

Clear as mud? My job is done here !

Tom in Colo

[free2breathe]

LOL, thanks Tom! I can wrap my head around the "the debt doesn't just disappear" part....I know cognitively that it lives in the debt beyond, and that if I chose, I could pay it back some day. I guess I just wasn't tying that part together with the trustee essentially doing the same thing. These trustees muddle our brains

So, regardless of the asset aspect, the creditors claims, the trustee saying that it could take a year to close the case, I shall look forward to starting my new year with a discharge!