Ch 7 Closing Timeline, Asset Case with Surplus Funds

[MollyJ]

Greetings from the Pacific Northwest,

My husband and I filed Chapter 7 in January of 2010 and received our discharge in early May of 2010. This is an asset case - and we're just about at the end of our rope with the attorney, so any information regarding experiences others have survived are extremely welcome. We are seeking help, a guideline, any clues as to what to expect with the timeline of actually closing this case.

The trustee collected approximately $35,000 in assets. A grand total of two claims were filed, totaling approximately $2,000. The last activity for filing of claims was in June of 2010. In early February, 2011, we received a copy of the Notice of Possible Surplus Funds sent to creditors listed who did not file a claim, giving them 21 more days to file a claim. None did. We've been told the trustee sent the final report in the beginning of April, and that the case would be closed as soon as it was approved. That process was approximated to be around four weeks.

What I can't seem to get answered is the following:
1. If/when the final report is approved, will the case be closed? Is there a waiting period after that time, say, 90 days, if a creditor doesn't agree with the settlement? (For the record, I'd LIKE the creditors to be paid - I'm just in desperate need of worst-case scenarios as to when this will be closed.)

2. Our home was foreclosed in April of 2010, and the bank actually made a profit from the sale of our home. We didn't discover this until we filed our taxes in March of 2011. Apparently, homeowners can and should receive the excess funds if the bank makes a profit on the foreclosed property at auction. We didn't disclose this to the trustee because we didn't know. Could this be considered an undisclosed asset, and if so, how screwed are we? We're not actively pursuing this, and we understand the importance of declaring everything.

3. What on Earth happens to the surplus assets? How does THAT exactly work?

4. And just for curiosities sake, how does a trustee get paid? I'm wondering for the entertainment value, I suppose.

It wasn't credit debt that sunk us; it was medical expenses. We need this case closed so our son can continue his medical treatment, and without a closed case, we can't accept the hospital's offer to finance the cost (interest free) since we can't enter into debt. That's a concept we completely agree with - please, don't misunderstand. It's soooooooo frustrating, however, being in a holding-pattern when it comes to a child.

Thanks for the long read if you've actually made it to the end of this post!
Molly

[despritfreya]

See 11 USC 726(a)(6): In a solvent estate, funds not used to pay the trustee, his attorney and creditors (the excess money) is eventually returned to the debtor. The closing of the case can take months and months but once it is closed the money will be sent to you. Before the Trustee can begin closing an asset case he must report to the US Trustee as to the potential distribution. The UST must review it and give his blessing. That can take 30 to 60 days. Then, to close the case the Trustee must file his notice of proposed distribution (which will include him and his attorney if he has one) and an application for payment of fees (his and, if he has one, his attorney). Interested parties are given 14 days to object. If no one objects he can make the distributions. He then has to wait until all checks are cashed. He can then do his final accounting. Once he does the final accounting the Court will be free to close the case.

I typically tell my clients that the closing will happen about 60 days after the final distribution but when that distribution will take place is anyone's guess.

Des.

[btbeme]

I have a morbid curiosity as to how an attorney would allow a client to have to fork over $35k in a Ch 7. I'd guess that you had a reason (hope it was a really, really good one) and I'm sorry that you were backed into that corner. Yeeeooowwww....

1. It won't be closed until at least 60 days after final distribution. Final distribution could happen tomorrow, or ten months from now. Your guess is as good as mine...but the Trustee has an obligation to do it as quickly as they feel is possible. The pending house sale may hold this up.
2. It isn't undisclosed so long as you were reasonably accurate with its valuation on your filing. Realistically, if the sale price is even close to the amounts owed, it is more likely that the obligations will rise to meet the cash flow...meaning the money grab will level off anything you might have made. But, if final distribution hasn't happened before the house sale is closed and the HUD-1 filed, I would guess the Trustee will try to grab a portion of anything coming your way. No worries from a legal standpoint, just a PITA from a monetary standpoint.
3. Short answer - whatever the Trustee sees fit. Longer answer - you may get the opportunity to buy them back. Too many variables here to make a guess, but some sort of sale will be held, and you will get notice.
4. Trustees get paid a flat rate per file plus a percentage of anything recovered in an asset case. Don't recall the numbers, but you can find them in this forum. They don't get wealthy being a Trustee, but is isn't a bad stream of income for many of them.

[AngelinaCat]

Hi MollyJ welcome to the forum.

We were an Asset Case, and ended up having to pay a little over 10K to the trustee for (1) to buy back our non-exempt items--Florida has lousy exemptions other than homestead--and (2) for a couple of preferential payments that we had. The bulk of our debt was caused by medical and legal issues thanks to an Enemy that made it his life's project to cyberstalk us and cost us our jobs. Legally, we could do nothing about it. Trying to defend against his frivolous lawsuits, and bring a suit against him is what caused us to make many bad financial decisions.

With all of that said, our timeline is roughly as follows: We filed Ch7 on Dec 28, 2007. The 341 was Feb 7, 2008. Sometime in March we were ruled an Asset Case, and the time extended for Creditors to file their objections. So, when we should have been discharged sometime in April, this got pushed back to mid-June. June, July came and went and well into August, 'Hub called our case worker at the courthouse. The holdup was the lack of a copy of our Marriage License in the file. We had a copy with us at our 341, but the trustee said he didn't need it. Well he did. Once that us uploaded, we got out Discharge on August 13, 2008. But it was not until a full year and more that we got our Close, and that was November 3, 2009.

I hope that helps.