When you file for bankruptcy a trustee is assigned to your case. This person is responsible for making sure your creditors are paid from the proceeds of your bankruptcy.
A trustee is not a substitute for a bankruptcy attorney. As a matter of fact, in many ways they are the opposite.
Despite their ability to answer questions and their understanding of the bankruptcy process, the trustee is not there to help you. Their sole job is to get as much money as they can from you and distribute it to your creditors. Your attorney is there to protect your rights and ensure things go as smoothly as possible for you.
Your Assets Become Part of the Bankruptcy Estate
When you file your bankruptcy, your assets become part of an estate. This includes your vehicles, real estate, jewelry, and money and bank accounts. The estate also includes money you are owed, including loans you’ve given, your rights to suing someone, and your interest in any businesses or investments.
When you file for chapter 7 bankruptcy, the trustee takes ownership of the estate and everything in it, and has the power to sell, liquidate, or pursue the value of the estate on behalf of your creditors. The only way to protect your assets from the trustee is to exempt them.
In addition to the assets you currently have, it’s important that you exempt assets you could have in the future. You need to exempt the money owed to you, through loans or money you stand to collect from a lawsuit or a business to which you have ownership. Otherwise, the trustee could potentially collect any money you receive and pass it on to your creditors.
Closing Your Bankruptcy Case
Your trustee only has control of your estate until the bankruptcy is complete. However, if something was in progress during your bankruptcy and you don’t collect the money until later, your trustee could still gain access to it.
For instance, if you’re in the process of suing someone before or during your bankruptcy, and you don’t receive the compensation until years after your bankruptcy is complete, the trustee could still take the money. If the asset existed on the date the bankruptcy was filed, it is considered part of the bankruptcy estate.
The important thing to remember is that discharge does not mean your bankruptcy case is over, nor does it end the trustee’s control.
If you have assets that need to be liquidated and distributed to creditors, your bankruptcy case could potentially remain open for years. The trustee remains in control until a no-asset report is filed and the case is officially closed.
You are responsible for making sure your case is closed. Don’t assume that once you’ve received a discharge that things are complete. Sometimes, it’s even necessary to make a request to the court for the trustee to decide whether an asset will be abandoned and returned to you. Working closely with your bankruptcy attorney will ensure all of the loose ends are tied up and you are able to move forward with your life in complete financial freedom.
So how long does a trustee remain in control? It varies. There is no time limit, so you need to monitor your case and ensure it is officially closed by the court.
To learn more about the trustee’s role in bankruptcy, check out this article from FindLaw.com.
For more information about whether or not your trustee remains in control of your assets, or to schedule a time to speak to someone about filing for bankruptcy, contact the Law Offices of Robert M. Geller at 813.254.5696.