What is an Asset Case in Chapter 7?
An Asset Case in Chapter 7 is where the trustee is taking some of your property or money owed to you. They take this “asset” to pay back creditors. An asset case in Chapter 7 is where you will lose something big or small in order to pay a fair share back to your creditors.
Terms Used in Asset Cases in Chapter 7
Certain terms are frequently used in asset cases in during Chapter 7. These are terms that you will see in notices. They alert you to the fact that an asset case is taking place. It usually lists the specific assets.
Frequent terms will occur such as “Notice of Abandonment,” “Possible Assets,” “Order in Asset Case,” and “Motion/Order for Turnover.” All of the above notices are saying that the trustee has determined that there are likely assets in the case. The Trustee will want to take the asset to make it part of their bankruptcy estate. This estate (property or money) will then be used to pay back creditor after some accounting is completed.
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Tax Refunds and Excess Money are the Most Common Assets
Most often, the asset is the tax refund for the coming year. Other times it is simply excess money that was not allowed at the time the case was filed. Look on the Notice of Abandonment OR the Motion for Turnover to see exactly what the asset is though.
What do you need to do if the asset is your coming tax refund? You need to file your taxes at the earliest possible time and request a paper refund check (not direct deposit). You need to send a copy of your federal and state tax returns (along with the unendorsed checks IF you received them) to your trustee. The address is listed for the trustee on your meeting of creditors notice. The trustee will take the portion that is necessary and then send you a check for the rest. However, remember that some variation occurs in different districts. You need to follow the more exact instructions of your bankruptcy trustee or your attorney.
Most times, no tax check will be issued and mailed, instead the Trustee will intercept the refund directly with an administrative order. What happens to this money? It is made part of the bankruptcy estate and distributed to any of their creditors who have filed a claim in their case.
What if You Do not Comply with the Court or Trustee?
The trustee will revoke the discharge. This may make it even worse than never filing bankruptcy because the case gets caught in a sort of limbo. Some creditors will maybe write off the debt but others will still collect. It also will not be entirely clear if you can simply refile Chapter 7 later in the future to get rid of the old debts. It is not a good place to be when a discharge is revoked in bankruptcy.
Can Your Discharge of Debt Be Revoked in Bankruptcy? – Bymaster Bankruptcy Law Offices
