Can a Trustee Seek More Money Than is Listed in the Claims Register Summary
My question involves bankruptcy in the state of: Conneticut
Hi.
Say you file for Chap7, where $50k is listed on the petition, and it turns out to be an asset case. Only some of the creditors have filed a claim, and the Claims Register Summary is $10k - does the trustee have the legal right to try and get the debtor to work out a deal for more than that? Or will $10k be the max?
Thanks!
Re: Can a Trustee Seek More Money Than is Listed in the Claims Register Summary
After the Trustee collects all assets he/she is permitted to collect and turns those assets into cash, he/she pays claims based upon the distribution permitted under 11 USC 726. Once the money is gone he/she does a final accounting and the Clerk closes the case. This has nothing to do with the Debtor but for any assets the Trustee takes from the Debtor and/or any settlements with the Debtor due to the loss of some asset or other controversy.
Edt to add: Oh, and, if, after payment of all claims there is money left over the money is returned to the Debtor.
Des.
Re: Can a Trustee Seek More Money Than is Listed in the Claims Register Summary
Got it - thank you.
But the question is, if you are cutting a deal with the trustee, whether or not the trustee is permitted to try and get from the debtor more than is listed on the Claims Register Summary?
Re: Can a Trustee Seek More Money Than is Listed in the Claims Register Summary
Quote:
Quoting
mbaron21
But the question is, if you are cutting a deal with the trustee, whether or not the trustee is permitted to try and get from the debtor more than is listed on the Claims Register Summary?
You missed my point. The Trustee will not collect more than is needed to pay ALL claims in full. Those claims, pursuant to 11 USC 726 INCLUDE all of the Trustee's fees (based upon a percentage of what he/she pays out), the Trustee's legal fees if he/she hired an attny, all timely filed claims, late filed claims (if any) and, if the estate is solvent, interest on the claims and, if there is anything left over it goes back to the debtor.
Therefore, if the claims register shows $50,000.00 and you settle whatever issues you have for $10,000.00 the Trustee will not be paying all claims in full. If the claims register shows $10,000.00 and you settle for $50,000.00 the Trustee may (and can) solicit creditors to file late claims. Very few will. He/she will then file a Notice of Proposed Distribution and any money not paid out will eventually be returned to you.
If you have an attny the attny will know how to work with the Trustee to try to get the Trustee not to solicit late claims thus only collect what is needed to pay all timely claims, the Trustee's fee and the Trustee's attny.
And. . . we are talking unsecured not secured claims. Trustees typically do not pay secured claims as the creditor can look to its collateral for payment.
Des.
Re: Can a Trustee Seek More Money Than is Listed in the Claims Register Summary
Hi, and thanks again.
"The Trustee will not collect more than is needed to pay ALL claims in full."
Yep, aware of that. Sorry if I have done a poor job at explaining.
Have 50k in debt
File for Chap7
Have about 40k in assets (probably should have never filed; that's besides the point)
Trustee determines this is an asset case
Trustee solicits all debtors
After the deadline, the total amount debtors have claimed is 10k
Does the Trustee have the legal right to seek more than the 10k + his fee?
Thank you.
Re: Can a Trustee Seek More Money Than is Listed in the Claims Register Summary
Legal right. . . Trustee only gets enough to pay off all filed claims and the administrative expenses of running the bk estate. If he collects more the surplus is returned. Let's use your numbers. There are currently $10k in claims. The Trustee's statutory fee on that amount is 25% of the first $5000 and then 10% of the next $5000 for a total of $1,750.00 so you would need to pay the Trustee $11,750.00. But this number DOES NOT include any legal fees the Trustee may have incurred nor any out of pocket expenses NOR any late filed claims. You need to get the Trustee to agree not to solicit late (additional) claims - this is where a good attny comes in.
Why don't you simply ask the Trustee to calculate what needs to be paid and pay it, instead of beating around the bush? Trustee may ask for a little extra to cover any late filed claims and then simply return the money if there are none.
Des.