Debtor’s discharge & trustee administration have different timelines

15 Mar Debtor’s discharge & trustee administration have different timelines

Chapter 7 debtors are often surprised to get a trustee request for turnover of an asset after they have gotten their discharge. They assume that the trustee’s work (and authority over assets) is over with the discharge. Not so.

The Bankruptcy Code set timelines for the debtor’s discharge to assure the debtor that he would know soon after filing the case whether there was a challenge to his discharge. Creditors have 60 days from the first meeting of creditors in which to file an objection with the court to the grant of a discharge of debts. Absent objection, the court issues the discharge shortly thereafter.

The trustee’s job of gathering up non exempt assets and turning them into cash may take years, not weeks. The debtor’s discharge has no impact, positive or negative, on the trustee’s mission to maximize the dividend that can be paid to creditors. After all, that is usually the last money the creditors will get on the discharged debt.

How long the case remains open in the trustee’s hands depends on the nature of the assets and the complexity of the task. Even once the trustee is through, the trustee’s final account may languish in the office of the United States Trustee, awaiting the UST’s approval of the account.

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Cathy Moran, Esq.

I'm a certified specialist in bankruptcy law (California State Bar Board of Legal Specialization) practicing in the San Francisco Bay Area for more than 30 years. In addition to practicing bankruptcy law, I train new practitioners at Bankruptcy Mastery.
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