What do unsecured creditors do in a Chapter 7 case?
If the debtor has nonexempt assets, unsecured creditors may file claims with the court within 90 days after the date of the meeting of creditors. The trustee examines these claims and files objections to those that are deemed improper. When the trustee has collected all of the debtor’s nonexempt property and converted it to cash, and when the court has ruled on any objections filed against the claims of creditors, the trustee distributes the funds according to certain priorities. Administrative expenses, claims for wages, salaries, and contributions to employee benefit plans, claims for the refund of certain deposits, and tax claims are given priority, in that order, in the distribution of funds by the trustee. If there are funds remaining after the payment of these priority claims, they are distributed pro rata to the remaining unsecured creditors. If the debtor has no nonexempt assets, the creditors are notified not to file claims.
