When and how are creditors paid by the Panel Trustee? Upon filing of the bankruptcy petition, the debtor turns over all non-exempt property to the court-appointed bankruptcy trustee, who then converts the property to cash to make a distribution to creditors.
What are some common reasons for filing a Chapter 7 Bankruptcy? Generally, most assets held by the average debtor are considered to be exempt.Debtors should be aware that there are several alternatives to chapter 7 relief. With the court's permission, however, individual debtors may pay in installments. For example, debtors who are engaged in business, including corporations, partnerships, and sole proprietorships, may prefer to remain in business and avoid liquidation. Debtors must also provide the assigned case trustee with a copy of the tax return or transcripts for the most recent tax year as well as tax returns filed during the case (including tax returns for prior years that had not been filed when the case began). HERO Liquidating Trust On December 2, 2016, the Debtors’ Modified Joint Prepackaged Chapter 11 Plan (Incorporating Mediation Settlement) of Hercules Offshore, Inc. and its debtor affiliates (“Plan”) became effective and their assets were transferred to the HERO Liquidating Trust. Sole proprietorships may also be eligible for relief under chapter 13 of the Bankruptcy Code. If the debtor's "current monthly income" (1) is more than the state median, the Bankruptcy Code requires application of a "means test" to determine whether the chapter 7 filing is presumptively abusive. Debtors should also be aware that out-of-court agreements with creditors or debt counseling services may provide an alternative to a bankruptcy filing. One of the primary purposes of bankruptcy is to discharge certain debts to give an honest individual debtor a "fresh start." The debtor has no liability for discharged debts. A chapter 7 case begins with the debtor filing a petition with the bankruptcy court serving the area where the individual lives or where the business debtor is organized or has its principal place of business or principal assets.