Some people are confused as to why they have to pay a trustee when they file a Chapter 7 bankruptcy. I get the confusion. Often, it can feel a little bit like being picked on when you are down and out. It is not meant to be that way though. You see, when you file bankruptcy, you must disclose the existence of all your assets. Upon filing the Chapter 7 Bankruptcy you technically do not own your assets anymore, a bankruptcy estate does.
However, you are presented with an opportunity to exempt your assets. Placing an exemption on one of your assets is announcing to your creditors that under state or federal laws you are allowed to retain possession and ownership of these assets. The trustee then has 30 days following the 341 meeting to object to your exemptions or your exemptions become 100% valid for all eternity. For example, if you exempt your home and the trustee doesn’t object, the ownership of the home reverts back to you 30 days after your 341 meeting.
However, sometimes you are not able to exempt all your assets or trustee objects to your exemption and the court sustains trustee’s objection. Should this occur, trustee has a fiduciary responsibility to creditors to liquidate the non-exempt assets and disburse proceeds to creditors based on a priority system and pro rata. Now, more often than not, trustee’s like to sell non-exempt assets back to debtor for a price agreed upon by both parties. And that is why you may have to pay trustee money. If you want to retain ownership and possession of a non-exempt asset, you may have to pay trustee money.
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When the time is right, or when you are ready to get your life back, reach out to Minnesota’s bankruptcy law firm at www.kainscott.com. You will be so glad you did!
