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What Can A Bankruptcy Trustee Do

Who Is The Bankruptcy Trustee

Can The Bankruptcy Trustee Take My Tax Refund?

The Bankruptcy Trustee is an individual appointed by the Court to supervise a bankruptcy case. Their duties depend on the type of bankruptcy case filed, and whether the case is filed under Chapter 7 or Chapter 13. The Trustee conducts the Meeting of Creditors that the debtor must attend and will review all of the financial information needed to evaluate the case and deal with applicable creditors. The Trustee, as an officer of the Court, is responsible for ensuring that all bankruptcy laws and rules have been followed and that proper steps are taken to bring any violations to the attention of the Court.

The Pitfalls Of Not Speaking With A Qualified Source Like A Registered Bankruptcy Trustee

Weve heard many horror stories about advice received from some so-called bankruptcy experts. After paying thousands in fees for paperwork, the advice rendered to some of the victims weve spoken with was woefully inaccurate.

While bankruptcy isnt the end of the world, it is serious business. Exorbitant fees and amateur advice could leave you high and dry, not only in the short term but in the long run too.

Lets be real, learning about bankruptcy can be pretty confusing at first. You definitely dont need the added stress of figuring out whether the information youre getting is even right.

If youre considering bankruptcy and own property, other unprotected assets or might need to pay contributions from your income, your best bet is to make sure the advice you get is accurate, qualified and regulated.

Here at Aravanis, we have three registered bankruptcy trustees. Youll find Andrew Aravanis, Ronil Roy and Alexander Clark listed on AFSAs bankruptcy trustee registry.

Compensation Of The Trustee

Trustees are paid on commission. The more money the trustee is able to pay to creditors, the higher the commission.

The trustee commission schedule is set forth as follows in section 326 of the bankruptcy code:

In a case under chapter 7 or 11, other than a case under subchapter V of chapter 11, the court may allow reasonable compensation under section 330 of this title of the trustee for the trustees services, payable after the trustee renders such services, not to exceed 25 percent on the first $5,000 or less, 10 percent on any amount in excess of $5,000 but not in excess of $50,000, 5 percent on any amount in excess of $50,000 but not in excess of $1,000,000, and reasonable compensation not to exceed 3 percent of such moneys in excess of $1,000,000, upon all moneys disbursed or turned over in the case by the trustee to parties in interest, excluding the debtor, but including holders of secured claims.

Nelson Mullins attorneys are experienced in handling all types of bankruptcy matters and have unique experience in representing bankruptcy trustees around the country and representing creditors in dealing with bankruptcy trustees, including defending clawback claims brought by trustees.

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Seek Professional Guidance Of A Chapter 7 Bankruptcy Attorney If A Trustee Is Trying To Sell Your Home

Given the complicated nature of a trustees sale of your property, and Chapter 7 bankruptcy in general, it is of utmost importance to seek professional guidance from a trusted bankruptcy attorney. If a trustee is attempting to sell your property in Chapter 7 bankruptcy, you may have options. If you are interested in keeping your house, you should connect with an experienced bankruptcy attorney. The experienced bankruptcy attorneys at Talkov Law can be contacted online or by the phone at .

The bankruptcy attorneys at Talkov Law are skilled in the areas of:

About Scott Talkov

Scott Talkov is a real estate lawyer, business litigator and bankruptcy lawyer in California. He founded Talkov Law Corp. after of experience with one of the region’s oldest law firms, where he served as one of the firm’s partners. He has been featured on ABC 7, CNN, KCBS, and KCAL-9, and in the Los Angeles Times, the Orange County Register, the San Diego Union-Tribune, the Press-Enterpise, and in Los Angeles Lawyer Magazine. Scott has been named a Super Lawyers Rising Star every year since 2013. He can be reached about new matters at or . He can also be contacted directly at .

How Does A Bankruptcy Trustee Get Paid

Can the Bankruptcy Trustee Take Your Inheritance?

How a Bankruptcy Trustee is paid can vary depending on the type of bankruptcy being filed. Under Chapter 7 bankruptcy, the filers debts are paid by selling nonexempt property, if any. Initially, a Bankruptcy Trustee receives a flat administrative fee to oversee and review the case.

The flat fee normally runs around $60, and it is paid out of the initial filing fee with the Court. Some individuals can qualify for a waiver of this fee which in turn waives the Trustee’s administrative fee. However, he or she may earn a commission from any nonexempt property he or she sells to pay off creditors.

If the filer has no nonexempt property the Trustee can sell to pay the debts, the Trustee can only be compensated via the administrative fee. If the Trustee is entitled to earn a commission from the sale of nonexempt property, a fee schedule is set and the commission cannot exceed the limits set.

Before getting any payment, the Bankruptcy Trustee is required to file an application with the Court, giving notice to the filer and all creditors of the fees being requested. Chapter 13 is a reorganization bankruptcy and does not involve the Trustee selling the filer’s property to pay off their debts.

Because of this difference, a Chapter 13 Bankruptcy Trustee does not receive a commission from selling the filer’s property. Instead, the Trustee earns to a percentage of the filer’s monthly payments made under the plan as compensation for working your their.

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The Bankruptcy Protection Court Case Facts

I want to tell you about Schendel Mechanical Contracting Ltd , 2021 ABQB 893. On November 9, 2021, the Honourable Mr. Justice Douglas R. Mah released his decision.

Schendel Mechanical Contracting Ltd. was one of three associated companies that at one time collectively formed a major construction concern in Alberta under the Schendel name. As a result of financial difficulties, it was an insolvent entity and it filed a Notice of Intention to Make A Proposal under the BIA on March 22, 2019. Schendel continued operations as part of its restructuring effort. On various Schendel projects, Schendel bought HVAC equipment from the supplier between April 2018 and May 2019.

Ultimately, Schendels debt restructuring plan failed. Schendel was deemed to have filed for bankruptcy when it failed to implement a successful BIA Proposal restructuring. Schendel went bankrupt immediately. Its secured creditor applied to the Court for the appointment of a Receiver, which was granted.

As a result of reviewing the companys books and records, the Receiver found and disputed the legality of a $40,000 payment from Schendel, an insolvent company, to one of its suppliers. According to the Applicant Receiver, the payment was prohibited for a number of reasons and the funds should be returned. The recipient supplier asserted that the payment was both innocent and validly received and that it was entitled to retain it.

bankruptcy protection

What Happens At The Meeting Of Creditors

During this meeting, the trustee will verify your government-issued photo ID and Social Security card or proof of Social Security number. The trustee will also need your proof of income, bank statements and other financial documents, like tax returns and loan statements.

It is the trustees job to ask you questions under oath and verify that your financial information is complete and accurate.

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How Do I File For Bankruptcy In Canada

When it comes to actually filing bankruptcy in Canada, its confusing for a lot of Canadians. Who do you contact? Where do you start? This is your guide to simplify bankruptcy and help you know where to start.

Weve helped thousands of Canadians deal with millions and millions of dollars in debt.

But as researching this stuff online can be horrible , we wanted to create a resource that explains in very simple language the basic questions you likely have about filing bankruptcy in Canada.

So where should you start? As mentioned, weve worked with thousands of Canadians are these are the 5 top questions we get asked about bankruptcy.

  • Can I file for bankruptcy on my own?
  • Will I get to keep my house?
  • If I declare bankruptcy, will my spouse or partner need to declare bankruptcy as well
  • How do I actually hire a bankruptcy trustee?
  • What assets do I get to keep if I declare bankruptcy?

Heres a detailed answer to all those questions, plus a few more we often hear.

ONE: Can I file for Bankruptcy on my own?

No, you cant.

In Canada, filing for Bankruptcy requires a Bankruptcy Trustee. This is the first step of filing bankruptcy in Canada: contact a bankruptcy trustee.

So how do you select and hire a bankruptcy trustee?

You can select the bankruptcy trustee you want to work with and although you will pay their fees its important to understand you dont technically hire a trustee as they dont work for you or represent you through the bankruptcy process.

It depends.

Will I Lose House In Bankruptcy

What questions will the chapter 7 bankruptcy trustee ask at the 341 Meeting of Creditors?

If you kept your house throughout the bankruptcy process, you are free to keep your home after the bankruptcy as long as you continue to pay the mortgage. It may be that after you are free of all the rest of your debt you will be able to afford the mortgage payments easily. If so, you ll be able to keep your house.

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The Bankruptcy Estate And Bankruptcy Trustee

In order to understand what a trustee is and what they do, it is best to first get a clear understanding of the concept known as the “bankruptcy estate.” Under bankruptcy law, at the time someone files for bankruptcy, a bankruptcy estate is created which is composed of the debtor’s property. The bankruptcy estate is its own distinct legal entity separate from the bankruptcy debtor.

Of course, since the bankruptcy estate is not a person, that’s where a bankruptcy trustee is needed to step in to play the role of overseeing the bankruptcy estate. The trustee will perform various duties required by law, as well as the circumstances of a given bankruptcy case. Trustees are people who are appointed or selected to oversee particular bankruptcy cases or a particular type of bankruptcy.

How Do I Claim Or Declare Bankruptcy

Before you file, the trustee will review all your debt relief options so you can .

The trustee will ask questions about your income, assets, and debts . If you cannot afford to repay your debts in full, the trustee may recommend bankruptcy, but they might also suggest you consider filing a consumer proposal as an alternative to bankruptcy if this makes more sense for your financial situation.

If you are considering bankruptcy, talk with a Licensed Insolvency Trustee today.

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When Exactly Will A Bankruptcy Trustee Choose To Sell A Debtors Property

However, not all assets will be sold by a trustee. Specifically, a debtor is allowed to retain some assets up to a certain value, which are referred to as exemptions.

Accordingly, before a trustee decides to sell estate property, they will generally consider the value of the property less any costs of sale, less any encumbrances less any exemptions.

Usually, a debtor has claimed a homestead exemption of $300,000 to $600,000 under California law. As of January 1, 2021, the increased automatic homestead exemption under California state law allows a debtor to claim up to a specific amount, determined by the debtors circumstances, of their equity as exempt. Cal. Code Civ. Proc. § 704.730-.

The trustee sells all other assets, which are nonexempt, for the purpose of paying unsecured creditors. 11 U.S.C. § 363. If, after the application of the proper homestead exemption, the remaining unencumbered equity in a debtors house exceeds the cost of selling the house, then the trustee will likely sell the property in order to pay the unsecured creditors. This means that the trustee may be able to sell your home by simply paying you the homestead.

What Is The Creditor’s Meeting In A Bankruptcy Proceeding

Can a Bankruptcy Attorney Office in Irvine Become a Trustee?

A meeting of creditors is the single hearing all debtors must attend in any bankruptcy proceeding. It is held outside the presence of the judge and usually occurs between twenty and forty days from the date the original petition is filed with the court.

In chapter 7, chapter 12, and chapter 13 cases, the trustee assigned by the court on behalf of the United States Trustee conducts the hearing. In chapter 11 cases where the debtor is in possession and no trustee is assigned, a representative of the United States Trustee`s office conducts the hearing.

The hearing permits the trustee or representative of the United States Trustee`s Office to review the debtor`s petition and schedules with the debtor facetoface. The debtor is required to answer questions under penalty of perjury concerning the debtor`s acts, conduct, property, liabilities, financial condition and any matter that may affect administration of the estate or the debtor`s right to discharge. This information enables the trustee or representative of the United States trustee`s Office to understand the debtor`s circumstances and facilitates efficient administration of the case.

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They Review And Confirm The Information Contained In The Bankruptcy Forms

They review the filerâs bankruptcy forms, paycheck stubs and tax returns. This is to make sure that the information on the bankruptcy forms matches the information that was submitted to the I.R.S. in the tax return. If the bankruptcy trustee finds that the filer is trying to hide assets or otherwise skirt tax or bankruptcy law, they can ask the U.S Attorney’s office to start a criminal investigation.

The trustee also reviews the debtorâs property to see if there are any nonexempt assets. The Chapter 7 bankruptcy system is based on the premise that the filer is able to keep only those assets that are protected by an exemption. Itâs the trusteeâs job to review the debtorâs property and make sure all exemptions claimed as part of the bankruptcy filing are proper.

If the trusteeâs office determines that an exemption was improperly claimed, they can file an objection with the bankruptcy court. Then itâs up to the bankruptcy judge to decide whether the property is protected. The deadline to file an objection to a claimed exemption is 30 days after the meeting of creditors is done.

Duties Of The Trustee Under Chapter 13

Similar to a Chapter 7 trustee, a Chapter 13 trustee will review the information submitted by the debtor when they file for bankruptcy. They will need to determine whether the debtor has sufficient income to make the proposed payments. They also will need to assess whether creditors will receive as much from the repayment plan as they would through a Chapter 7 bankruptcy.

A Chapter 13 trustee will conduct the Section 341 meeting of creditors and will attend a confirmation hearing if this is needed.

While the debtor waits for approval of their repayment plan, the Chapter 13 trustee will hold their monthly payments in trust for creditors. If the court approves the plan, the trustee will start paying creditors from the funds and will continue until the plan is successfully completed three to five years later. They will be responsible for recording the payments received from the debtor and the amounts distributed to creditors. Meanwhile, they will review each proof of claim submitted by a creditor and object to any proof of claim that lacks adequate support.

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What Happens To My Car If I File Bankruptcy

  • If you have a car loan, it is considered a secured debt, and any asset tied to a secured debt is exempt from seizure. In this case, you can keep the car as long as you can continue making your car loan payments.
  • If you fully own the car, you can keep it as long the vehicles value is not more than the allowed maximum exemption limit in your province.
  • You can only keep one motor vehicle up to $6,600 in value.

If you have multiple vehicles, it is best to speak to your licenced insolvency trustee about your options to retain other vehicles.

Chapter 13 Repayment Plan

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Chapter 13 bankruptcy allows individuals with regular income to keep their property and pay debts based on a repayment plan over three to five years. The court approves the plan and budget, and the trustee acts as a disbursing agent, accepting payments from the debtor and distributing them to creditors based on the repayment plan.

The Chapter 13 bankruptcy process includes a meeting of creditors and the debtor, set up and run by the trustee. Before the meeting, the trustee can consult with the trustee to make sure that the petition and repayment plan are complete and accurate.

Chapter 13 trustees are called standing trustees because they have a standing appointment to cases within a specific geographic area.

In some cases, a Chapter 13 trustee may advise the debtor to take a course in financial management.

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What Authority Does A Trustee Have In A Chapter 7 Bankruptcy

The trustee in a Chapter 7 bankruptcy case has a tremendous amount of power over you. The Chapter 7 trustee is charged with the duty of making sure that any asset that can be seized from you is seized and sold and the monies are distributed to the general unsecured creditors who have followed the rules regarding how to apply for a distribution. The Chapter 7 bankruptcy trustee can also pursue claims on your behalf. For example, if you have a breach of contract claim or a personal injury claim, the Chapter 7 trustee can pursue the party that wronged you, pull that money into the bankruptcy case, and distribute that money to the unsecured creditors in your case after paying himself a commission on the sliding scale set forth in the bankruptcy laws.

Another example, and this is one that debtors often fall into as a trap, is when the debtor repaid within the last year debts owed to family members. Oftentimes, a person who is contemplating filing a Chapter 7 bankruptcy will pay off all debts owed to family members, because the person does not want to erase the debt in the bankruptcy case. But the law is written in such a way that this understandable behavior is impermissible. All creditors are required to be treated alike. Your sweet grandmother who loaned you part of her life savings is looked at by our cold, harsh legal system as no different than a debt owed to a major multi-national bank.


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