“And Now The End Is Near…” The Trustee’s Statement Of Intentions At The End Of The Meeting Of Creditors
By Kevin Gipson, New Orleans Bankruptcy Attorney on Feb 2, 2007 in Bankruptcy Practice and Procedure, General Bankruptcy Information
At the end of the meeting with the trustee (also known as a Meeting of Creditors or a Section 341(a) meeting), the Trustee will generally announce what he plans to do with the debtor’s property. This is usually referred to as a “Statement of Intentions”.
Unfortunately, the Statement of Intentions tends to be in Legalese and debtors frequently leave the meeting uncertain of what the Trustee intends to do with their property. The following are three phrases you may hear and what they mean.
1) THE PROPERTY IS EXEMPT.
Property that is exempt cannot be sold (liquidated) by the trustee and is retained by the debtor.
2) THE PROPERTY IS UNWORTHY OF ADMINISTRATION.
Property that is unworthy of administration is property that, while not exempt, has little or no equity value. Simply put, it is not worth the time, effort and cost for the trustee to seize the item of property and sell it. This property is usually abandoned by the trustee and is also retained by the debtor.
3) THE PROPERTY IS ENCUMBERED.
An encumbrance is a secured debt such as a mortgage or a car loan. For most debtors the encumbrance also makes the property unworthy of administration.
Finally, don’t be afraid to ask questions if you hear something said at the trustee’s meeting that you don’t understand. Bankruptcy lawyers and trustees use these terms on a regular basis: you don’t.
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