What happens to the property that the debtor turns over to the trustee?
It is usually converted to cash, which is used to pay the fees and expenses of the trustee and to pay dividends to creditors. Top • What if the debtor has only exempt property? If, from the debtor’s chapter 7 schedules, it appears that the debtor has only exempt property, a notice will be sent to the creditors advising them that there appears to be no assets from which to pay creditors. It will further state that it is unnecessary for them to file claims. If assets are later discovered, the creditors will then be given an opportunity to file claims. Top • How are secured creditors dealt within a Chapter 7 case? Secured creditors are creditors with valid mortgages or liens against property of the debtor. Property of the debtor that is encumbered by a valid mortgage or lien is called secured property. A secured creditor is usually permitted to repossess or foreclose its secured property, unless the value of the secured property exceeds that amount owed to the creditor.
