Buckeye, AZ asked in Bankruptcy for Arizona

Q: Can a Trustee re-open a Chapter 7 closed case?

I received a discharge date on 5/8/19 on a Chapter 7 no asset. Pro se. The trustee submitted the final accounting report and Judge signed on 12/17/20. I was notified a settlement check went to the trustee. Does that mean they are going to re-open my case again? Can I hire an attorney to get my $500 settlement check back?

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3 Lawyer Answers
W. J. Winterstein Jr.
W. J. Winterstein Jr.
PREMIUM
Answered
  • Bankruptcy Lawyer
  • Boyertown, PA

A: I'd be shocked if the Ch. 7 Trustee did not return that check to whoever sent it, or relayed it on to you.

Several years ago, a Ch. 7 debtor I represented sold a car for $9,000 and had a check to himself in return. I advised him to have the buyer write a second check, to the Ch. 7 trustee. A few weeks later, the Trustee returned the check to me to give to the debtor. At a hearing soon after, I mentioned that to the bankruptcy judge at the conclusion of a hearing. She explained to me that the Ch. 7 trustees are not interested in anything for under $10,000 if that's the only asset in the estate to be liquidated, because the costs of administering that, including the costs of an accountant for the Trustee to prepare the required bankruptcy reports to the court and the U.S. trustee, would consume all the money and there'd be nothing left to distribute to creditors.

Certainly, the same is true of a $500 check, especially after the case has been closed and the Ch. 7 trustee has been discharged.

Whoever owes you the $500 should just be paying you. Perhaps the Ch. 7 trustee can be enlisted to tell the check source that same thing.

Timothy Denison agrees with this answer

Diane L. Drain
Diane L. Drain
Answered
  • Bankruptcy Lawyer
  • Phoenix, AZ
  • Licensed in Arizona

A: In Arizona, the settlement is usually not exempt. Therefore, the trustee has a duty to decide if it is sufficient to administrate. The trustee may elect to return the funds to you. You can make an appointment to talk to a volunteer attorney at the Bankruptcy Court's Self-Help Center - 604-682-4007. My best to you.

Timothy Denison agrees with this answer

Cristina M. Lipan
Cristina M. Lipan
Answered
  • Bankruptcy Lawyer
  • Wantagh, NY

A: It is very unlikely the Trustee would re-open a case for $500. Just re-opening would cost more than $500. As previously noted, Trustees will abandon assets, even if they properly belong to the estate, if the administrative costs of doing so outweigh the benefit.

Timothy Denison agrees with this answer

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