What if the bankruptcy court wants some of my stuff?
If you file a bankruptcy and the court wants some of your personal property to pay some of your debts, how does that work?
In Chapter 7, a trustee is appointed in every case filing to review your asset schedules, question you under oath to determine whether you are being honest, and to collect and sell non-exempt property for the benefit of your creditors. Once the money is collected, the trustee will take a commission and distribute the money to your creditors. For most creditors, this is the only money the creditors receive on their claims.
Prior to filing you should have listed all of your property and your attorney will provide to you guidance on what to expect through the application of your exemption schedules. Once filed, about a month later, you will attend what is known as the 341(a) meeting of creditors. This is a formal interview, under oath, where you can be asked questions about your debts, assets, income and expenses. At the conclusion of this meeting, the trustee will typically report one of three conclusions:
1. This is a no asset case and the trustee is taking no interest in your property.
2. This trustee needs more time to investigate whether or not he or she is taking an interest in your property.
3. This is an asset case and the trustee wants to collect some of your property for sale for the benefit of your creditors.
You should know going into the meeting with the trustee in general what to expect.