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Why are there unclaimed funds in the Bankruptcy Court?

April 26, 2017Bankruptcy Court funds unclaimed

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Why are there unclaimed funds in the Bankruptcy Court?

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As part of administering a bankruptcy case, the trustee in a Chapter 7, 12, or 13 case may disburse funds to creditors (if funds are available). Most unclaimed funds arise in bankruptcy cases when the checks mailed by the trustee to the creditors are not cashed. Under the Bankruptcy Code, the trustee must stop payment on any check that remains unpaid 90 days after final distribution in the case. The unclaimed funds are turned over to the court to hold for the benefit of the creditor. The United States Bankruptcy Courts have policies and procedures for holding, safeguarding, and accounting for the funds for the benefit of the owners.