How Long After Discharge Can a Trustee Take Assets?

By Beverly Bird

Debtors often believe that when they receive a bankruptcy discharge, their case is over, but this isn't always true. Your bankruptcy case remains open, and the trustee can reach your property indefinitely until he either abandons the particular asset or files a no-asset report with the court.

Chapter 7 versus Chapter 13

Chapter 13 bankruptcy requires a repayment plan to satisfy your creditors. The trustee doesn't take your assets in this type of bankruptcy, but your assets are primarily vulnerable in a chapter 7 proceeding, because your creditors receive payment from the sale of your property.

When the Trustee Abandons Assets

Sometimes, it's not worth it for the trustee to go to the time and expense of selling a particular asset, such as when there's little equity or value in it. He is supposed to file a notice of abandonment when this happens. If he doesn't, and if the asset appreciates in value, it may eventually be worth liquidating. If your case remains open, the trustee can still order the sale of the asset, even if you've received a discharge. However, you have the right to file a motion asking the court to order him to abandon the property if he's not going to sell it. After the trustee abandons an asset, he can't reclaim it for sale.

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When the Trustee Files a No-Asset Report

A Chapter 7 bankruptcy remains open until the trustee files a no-asset report with the court. Trustees do this when they've sold everything there is to sell and abandoned any remaining property. Until you receive a copy of this report, the trustee can come back and take assets, but only if you owned them at the time you filed.

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Do You Always Get a Notice of Abandonment From a Trustee?


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Will the Trustee Come to My Home & Inventory My Possessions If I File Chapter 7 Bankruptcy?

After you file your petition for Chapter 7 bankruptcy, a court-appointed trustee begins evaluating your assets to determine whether they are subject to being sold to repay your creditors. Although the trustee has authority to come to your home to physically inspect your property, this is not common because in most Chapter 7 bankruptcies, there are very little or no assets to liquidate. However, if the trustee determines you have property that can be sold, you are likely to be visited by an appraiser or real estate agent.

What Is Open Bankruptcy?

A bankruptcy case that is currently underway is sometimes referred to as an open bankruptcy. In other words, an open bankruptcy is one that is not yet discharged. How long a bankruptcy case remains open depends on the type of case the debtor filed.

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If you're contemplating filing for Chapter 7, you can take some comfort in knowing that trustees do not sell any of the debtor's property in about 90 percent of the cases they handle. This isn't to say that they let debtors keep their assets out of the goodness of their hearts. It means that in nine out of 10 cases, circumstances align so that there's no reason for the trustee to liquidate property.

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