Is my property safe if I file a case under Chapter 7 of the Bankruptcy Code?
In a bankruptcy filed under Chapter 7 of the Bankruptcy Code, Trustees abandon property by not administering it. This is found in Section 554(d) of the Bankruptcy Code. This is done by the trustee filing what is known as a no asset report. Let us read 544 (d):
§ 554. Abandonment of property of the estate
(d) Unless the court orders otherwise, property of the estate that is not abandoned under this section and that is not administered in the case remains property of the estate.
In addition, Rule 4003(b) of the Federal Rules of Bankruptcy Procedure state that an objection to exemptions should be filed within a certain time period. After this, the debtor's property should be safe from being administered. It is very important that a trustee file a no asset report and abandon the debtor's property. Rule 4003(b) says:
Rule 4003. Exemptions
(b) Objecting to a Claim of Exemptions.
(1) Except as provided in paragraphs (2) and (3), a party in interest may file an objection to the list of property claimed as exempt within 30 days after the meeting of creditors held under § 341(a) is concluded or within 30 days after any amendment to the list or supplemental schedules is filed, whichever is later. The court may, for cause, extend the time for filing objections if, before the time to object expires, a party in interest files a request for an extension.
(2) The trustee may file an objection to a claim of exemption at any time prior to one year after the closing of the case if the debtor fraudulently asserted the claim of exemption. The trustee shall deliver or mail the objection to the debtor and the debtor's attorney, and to any person filing the list of exempt property and that person's attorney.
(3) An objection to a claim of exemption based on § 522(q) shall be filed before the closing of the case. If an exemption is first claimed after a case is reopened, an objection shall be filed before the reopened case is closed.
(4) A copy of any objection shall be delivered or mailed to the trustee, the debtor and the debtor's attorney, and the person filing the list and that person's attorney.
For more information on a chapter 7 bankruptcy, call to set up your free consultation with the Rashid Law Firm at 832-209-8833.