Trustee Now Holding Funds for the Estate

If you end up turning money or assets over to the trustee then you case will be held open for much longer. If your Trustee receives funds then they must go through a lengthy process to distribute those funds to qualified creditors. There are four main steps that will occur during this process.

First, your Trustee will file a report stating that they are now holding funds. The entry on the Court docket will read; “the Trustee reports that he or she now holds funds of this bankruptcy estate or expects to receive funds which should result in a dividend to creditors who were previously instructed not to file claims. The Trustee hereby requests that the Court fix the last date for filing proofs of claim and that notice be given to creditors.”

Second, the Arizona Bankruptcy Court will file a “NOTICE FIXING LAST DATE TO FILE CLAIMS”. This notice informs creditors that they have 90 days to file a Proof of Claim with the Court and request a piece of the money that your bankruptcy trustee is holding.

Third, once the Notice to file a Proof of Claim has been sent out to creditors, your creditors have just 90 days to file a Proof of Claim with the Bankruptcy court.

Fourth, your Trustee will disburse funds to qualified creditors. In addition to creditors who file a Proof of Claim with the court, your Trustee will also reimburse themselves for all their time and costs involved in administrating your case. They also will make payments to any bankruptcy law firms that were hired to help them with your case. However, before your Trustee can reimburse themselves or co-counsel they must file an Application for Compensation with the Bankruptcy court.

Unfortunately, this entire process takes at least a year! During which time your bankruptcy is deemed to be “open” even if you have received your discharge.