Today I want to answer the question, “Why is the trustee looking so closely at my case?”

You should know that trustees in Chapter 7 are private attorneys appointed to a panel by the Department of Justice. They are paid $65.00 a case; usually that’s all they get for about 95 percent of their cases. In 5 percent of their cases they’re able to identify assets; these are assets that can be liquidated for the benefit of creditors, even if creditors are going to get only two cents, three cents, or ten cents on the dollar. That’s better for the creditors than getting nothing, which usually happens in bankruptcy. The trustee will get paid more than the $65.00 they get by statute – only if they locate assets to pay creditors. When they do that, they can hire themselves as their law firm and be paid between $300.00 and $500.00 an hour, plus they get a percentage of all the money they distribute to creditors. That percentage is between 3 and 25 percent, depending upon the amount that is distributed based on a sliding scale.

When a trustee gets your case, they have to make a quick decision whether it is likely there are going to be assets that they can liquidate for your creditors. If they come to the decision that that’s not going to happen, they’re going to close your case, file a “No Distribution” report and say, “This is a no-asset case.” That’s a great thing to get if you are a Chapter 7 debtor.

But sometimes they have to look a lot harder. Maybe there is a litigation asset they can get. Maybe they can sell your car. Maybe the house is worth more than you say it is in your schedules. Maybe you have a tax refund that is exceeding your exemptions or some combination of those. They’re going to keep your case open and analyze whether or not there are assets. That way they can get a payday more than the $65.00 that they’ll normally get from a case. That’s why, in most cases, you should expect that the trustee is going to keep your case open and take a close look to see if you’ve got assets for the benefit of your creditors, and incidentally, the trustee.

If you have a question about whether or not the trustee is going to take a close look at your case, please pick up the phone and call me at 410-484-9000. I’d love to hear from you.