What does it mean when the Trustee abandons property?

31 May What does it mean when the Trustee abandons property?

The filing of a bankruptcy case creates an estate that is comprised of all of the debtor’s interests in property. The bankruptcy trustee has the duty of administering the property of the estate. If the property has value that exceeds the exempt value, the trustee will liquidate the property and distribute the net proceeds to creditors in the order of their claim priorities. However, not all estate property is valuable. Section 544(a) of the Bankruptcy Code allows the trustee to abandon any property of the estate that is burdensome to the estate or is of inconsequential value and benefit to the estate. The property may be abandoned to the debtor if he is in possession of the property or it may be abandoned to the lien holder if the lien is greater than the value. For instance, if you have $100.00 in your savings account that your attorney cannot exempt, the trustee has the right to ask you to turn over the money to the trustee. Or, the trustee can abandon the money back to you because it is too burdensome (cost too much money and time) for the trustee to take and distribute to your creditors.

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Jay S. Fleischman is a bankruptcy lawyer with offices in Los Angeles and New York. He can often be found on Google+ and Twitter, where he shares information about consumer protection issues and personal finance.
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