What happens when Trustee finds Assets in Bankruptcy?

That is a good question when trustee finds assets, the first thing the trustee would do is to change it from No Assets to Find Assets. The trustee would give a notice under Bankruptcy Rule 3002(c)(5), that the trustee has found assets in this bankruptcy estate from which a payment of a dividend appears possible. Any creditor holding a claim against the estate may file a proof of claim in the office of the Clerk of the Bankruptcy Court, 300 Las Vegas Boulevard South, Las Vega, Nevada 89101. However, this is just the beginning, and no need to be optimistic. It is just a statement. Now, you need to file claims. More than likely, if there are enough assets, the filers may at least get 10 cent on the dollar. Some may not even get that. The awards are distributed on the order of priority.

This proof of claim must be filed for a dividend within 90 days after the date of the mailing of this notice.

Furthermore, pursuant to Local Bankruptcy Rule 2002(7), after the expiration of the claims bar date in a Chapter 7 case, all notices required by Fed. R. Bank P. 2002(a), may be mailed only to creditors whose claims have been filed with the clerk of the court and to creditors, if any, who are permitted to file claims by reason of an extension granted under Fed. R. Bank. P. 3002(c)(6).

How this proof of claim can be filed?

Before we provide instructions, let us define who is a debtor, creditor, secured claim and unsecured claim, because a distinction and demarcation is very important in our discussion here.

Debtor
This person, corporation, or other entity that has filed a bankruptcy case is called the debtor.

Creditor
A creditor is any person, corporation or other entity to whom the debtor owed a debt on the date that the bankruptcy case was filed.

Proof of claim
A form telling the bankruptcy court how much the debtor owed a creditor at the time of the bankruptcy case was filed (the amount of the creditor’s claim). This form must be filed with the clerk of the bankruptcy court where the bankruptcy was filed.

Secured Claim
A claim is a secured claim to the extent that the creditor has a lien on property of the debtor (collateral) that gives the creditor the right to be paid from that property before creditors ho do not have liens on the property. Examples of lien are a mortgage on real estate and a security interest in a car, truck, boat, television set, or other item of property. A lien may have been obtained through a court proceeding before the bankruptcy case began; in some states a court judgment is a lien.

Unsecured claim
If a claim is not a secured claim it is an unsecured claim. A claim may be party secured and partly unsecured if th property on which a creditor has a lien is not worth enough to pay the creditor in full.

Unsecured Priority Claim
Certain types of unsecured claims are given priority, so they are to be in bankruptcy cases before most other unsecured class (if there is enough money or property available to pay these claims). The most common types of priority claims are listed on the proof of claim form. Unsecured claims that are not specifically given priority status by the bankruptcy laws are classified and unsecured nonpriority claims.

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