Chapter 7 is also known as the liquidation proceedings and is governed by the Chapter 7 bankruptcy trustee. It’s an immediate proceeding that allows for a fresh start. It is sometimes called “the good one,” because it’s the type most individuals think of when they consider bankruptcy. However, Chapter 7 is not the best option when a person has lots of assets they need to protect. With that in mind, one should consult with a bankruptcy attorney before deciding whether Chapter 7 is right in any individual circumstance.
Chapter 7 Bankruptcy Trustee
If one does move forward with a Chapter 7 Bankruptcy action, there will be a lot of discussion about the Chapter 7 bankruptcy trustee. The Chapter 7 bankruptcy trustee, “debtor in possession,” is also the one to ensure that all of the assets, debts and expenses are correctly accounted for. The debtor becomes the legal owner of all of the debts and assets while the case is in bankruptcy. The trustee will also be on the lookout for fraudulent transfers. See bankruptcy case Granfinanciera, S. A., et al. v. Nordberg.
The Chapter 7 Automatic Stay
As soon as a bankruptcy case is filed, a stay prohibits any further collection activity. The stay allows for a period of inactivity so that the Chapter 7 bankruptcy trustee, sometimes called the “debtor in possession,” can collect and assemble all of the assets (the things of value the debtor owns,) sell them, and then distribute the monetary gain among the creditors in order of priority.
Chapter 7 Bankruptcy Trustee and Fraudulent Transfers
The chapter 7 bankruptcy trustee will also be reviewing the case for evidence of fraudulent transfers. An example of a fraudulent transfer is when money or an asset is disguised as a gift to a family member or friend when in reality the transfer is meant as a loan to be repaid after the bankruptcy proceeding is over. For more information on fraudulent transfers click here.
Another possible form of a fraudulent transfer for a bankruptcy trustee to consider is disvaluing an asset. For example, if a wine collection valued at one-hundred dollars in reality contains multiple bottles of wine worth over one-thousand dollars, a Chapter 7 bankruptcy trustee would try to uncover that type of fact. It is important to realize that bankruptcy fraud and bankruptcy-related crimes are investigated by the Federal Bureau of Investigation.
Preparing for a Chapter 7 Bankruptcy
In Chapter 7 Bankruptcy, the first step is to gather the assets and then subtract the debts so that the portion of repayment can be calculated. The role of the Chapter 7 bankruptcy trustee, therefore, is imperative to ensure all creditors are paid what they are due under the law. See bankruptcy case Robert Louis Marrama, Petitioner, v. Citizens Bank of Massachusetts.
Honest reporting of all assets, liabilities, income and expenses to both your bankruptcy attorney and the Court is vital. Lying on any Official Bankruptcy Form or Affidavit is perjury and punishable by law. If you are unsure how to correctly report your assets, liabilities, or income contact a bankruptcy attorney in Tampa.
Chapter 7 Law Firm
At Florida Law Advisers, P.A. we understand that filing for bankruptcy can be a very confusing and intimidating process. That is why we work so hard to make the process as easy as possible for our clients. When you hire Florida Law Advisers, P.A., you get an experienced bankruptcy lawyer by your side throughout every phase of the bankruptcy process. We will help ensure your rights are protected, keep you well-informed every step of the way. To schedule a free consultation with a bankruptcy lawyer in Tampa call us today at 800 990 7763