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What Happens Between Discharge and Closure?

It may come as a surprise but while a discharge is usually the goal of a New York bankruptcy, it’s not the end of the case. Fortunately, most of what happens between discharge and closure are actions performed by the trustee, but it’s still worth knowing what those steps are if you’re considering bankruptcy or are in bankruptcy and would like your case to end for some reason even though the discharge has been entered.

(1)  The trustee needs to liquidate or abandon any nonexempt assets. Until that happens the debtor can’t sell them. If the debtor does so, then the trustee will chase the debtor down for the proceeds of the sale.

(2)  The trustee must recover any property that was fraudulently or preferentially transferred by the debtor.

(3)  The trustee must make the final distribution of the proceeds from the sales of the assets, if any, to the creditors.

(4)  The trustee must file a final report about the case with the bankruptcy.

(5)  Then the bankruptcy court will enter the order closing the case.

It’s not uncommon for debtors to not receive the final order. If this happens to you and you want it, then contact your bankruptcy lawyer or the bankruptcy court.

Most bankruptcies, particularly no-asset cases, are closed right after the discharge because the trustee has already filed the report of no assets. However, in cases with assets, sometimes the process becomes drawn out, and cases can last for years. Usually this happens in the first three points listed. The trustee might have trouble selling some assets or recovering a transferred asset that should have belonged to the bankruptcy estate to begin with. If it’s the former, and the debtor wants to sell the asset, the only recourse is to move the bankruptcy court to order the trustee to abandon the asset. It’s rarely the case that a trustee is incompetent or drawing out a bankruptcy deliberately for some reason or another.

If you have a discharge and are encountering difficulties closing your case, an experienced New York bankruptcy lawyer can help speed up the process. I also represent the trustee in cases that haven’t closed.

For answers to more questions about bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced Brooklyn NY foreclosure attorneys Bruce Weiner for a free initial consultation.

Rosenberg, Musso & Weiner, L.L.P
26 Court St # 2211
Brooklyn, NY 11242, USA

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