True or False: Bankruptcy Discharge Completes the Process
It is very common for a person to assume that once their bankruptcy is discharged, their case is over. They may wonder why their trustee is still contacting them. This misunderstanding is due to the focus of the debtor on discharge. As you work with a bankruptcy attorney, it is true that the goal is discharge. However, it is not true that a discharge will necessarily be the end of the process.
Understand the job of the Chapter 7 Trustee
A Chapter 7 bankruptcy Trustee does not see their job end at the 341 meeting where you will appear and answer questions. In fact, most Chapter 7 cases (more than 98%) will end when the trustee first meets with the debtors creditors on account of the fact that most debtors do not have any assets that will be administered by the trustee. This is often due to the debtor only have assets that are not valuable or having assets that are exempt from the bankruptcy.
The trustee still needs to make distributions
The trustee will need to know about any bank balances on the date the bankruptcy is filed and they will need to know about any transfers that may be recoverable. If there are assets the debtor still has, then the trustee may need to distribute them. At the very least, the trustee will need to review any claims that have been filed by creditors. If the bankruptcy actually has income, then the trustee may need to file a tax return. As you can see, there may be a lot of work left for the trustee after the bankruptcy is discharged.
The debtor may not have much additional work to do
On the other hand, the debtor usually has a shorter path to being done with their bankruptcy. The Bankruptcy Code is written to ensure that the debtor knows soon after filing if they are going to get a discharge. The debtor will quickly be informed if there is a dispute about them getting a discharge or if there is a particular debt that is not dischargeable.
Creditors get a notice right after the bankruptcy case is filed and this notice sets out the deadlines the creditors have to challenge the discharge in total or for a particular debt. Generally speaking, this is 60 days after the date of the first meeting of the creditors.
If a creditor does challenge the discharge, then they must file an adversary proceeding with the court within that set amount of time. If they do not do so, then the court will issue the discharge. The debtor is likely to then feel relieved that the process is over. However, as noted above, the trustee still has work to do.
Can bankruptcies change a person’s life? Absolutely. Can they be complicated? They don’t need to be. All you need to do is contact a bankruptcy attorney who can handle the tough work for you. Reach out to California Bankruptcy Relief at (888) 748-0025 for a free consultation.