Friday, October 28, 2016
Why Might The Trustee Try To Seize Property During My Bankruptcy
The Trustee assigned to your case is an impartial person, charged with the duty of administering your bankruptcy case. The Trustee is also responsible for looking out for unsecured creditors, and trying to find assets to satisfy some of your unsecured debt. In most cases, there are not assets for the Trustee to go after, but that is not always the case. If the Trustee begins asking you questions about your assets, allow your attorney to discuss the matter with you and handle the issue with the Trustee. Most times the questions are harmless, but there can be times when the Trustee is trying to figure out if you have an asset that is available for seizure.
The bankruptcy trustee might try to seize property during your case if he believes there is a chance the property can be sold and the proceeds used to pay some of your unsecured debt. It works like this:
• Debts are typically secured by collateral, as a promise to repay the debt. For instance, your house loan is a secured debt where repayment of the debt is secured by mortgage or deed and your car loan is secured by your vehicle; meaning until the debt is paid in full the lender keeps a security interest in the property. But, if the lender failed to properly note their security interest, the trustee might be able to declare their interest as unsecured and seize the property for the benefit of the unsecured creditors. If that happens, the Trustee will file a notice in your case setting forth the reasons he or she thinks the lender is not a secured lender, and ask the Court for a ruling. If the Court agrees, the property can be sold and the proceeds given to the Trustee to distribute.
• In order for an unsecured creditor to get a part of the money the Trustee is able to get under this type of scenario, the creditor has to ask for a disbursement by filing a proof of claim.
• The property also has to be nonexempt property, which means the Trustee cannot take things from you for which you have a valid legal exemption. Most homes and cars are exempt, so you should not worry about the possibility of being homeless or on foot.
This type of procedure within your bankruptcy case is not a personal attack on you, and is merely the Trustee doing his or her job. But, we understand it can be unsettling to learn the Trustee is looking at your assets, and are here to protect your rights.
For more information about the Trustee’s role in your bankruptcy case, call us today or reach us online at www.law-ri.com. We will help by coming up with solutions that work for you and have multiple locations for more convenient one on one office visits.