Is this bad news?

[brtb]

Received this in the mail today:

Notice of Need to File Proof of Claim

The initial notice in this case instructed creditors that it was not necessary to file a proof of claim. Since that notice was send, the trustee has advised that there are assets from which a distribution may be paid.

Deadline is Dec. 11, 2014

The asset is a trust of which I'm one of four beneficiaries that gets an annual distribution.

I'm so upset by this. The trustee herself admitted that she didn't know if it was even legal to go after the trust.

[justbroke]

It means that you are an asset case and the Trustee intends to recover assets on behalf of the creditors. Creditors must file a claim in order to be paid from the proceeds of the sale of assets.

I don't know why you are upset. The Trustee hinted that they didn't know if it was legal, but they did their research and they are going to go after the Trust. If there is a defense for the Trust, then the Trust should defend the Trustee's lawsuit.

I would hope that your attorney counseled you on this Trust and that it may be exposed.

[despritfreya]

What does your attny say?

If the trust has a valid spendthrift clause there may be no problem. A lot will turn on state law (where the trust was formed) and the rights you have to the annual distribution. JB is correct. The Trust will have to defend the bk trustee's advances. Who is the administrator (trustee) of the trust. . . a family member or a professional trust fiduciary?

Des.

[AngelinaCat]

And what kind of trust is it?

We have an irrevocable charitable remainder uni-trust (CRUT) that makes an annual distribution also. We had it when we filed CH7 in 2007. It was created in 2003, long before the need to file BK occurred. It is a Retirement Instrument, and our trustee could not touch it.

Edited to add: I should also say that since this annual distribution occurs in January each year, we had to wait a full six months in order to file, so that this distribution would fall out of the standard six-month look-back. (Then our inept attorney entered drag-feet mode, to the point that we were camping in her office at 4:30 PM on the last business day of the year, 2007, to get her to file our case.) [We hired her in August 2006--so she couldn't say she didn't have time.]