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What is a Trustee’s Report of No Distribution in a Chapter 7 Bankruptcy?

In most Chapter 7 Bankruptcy cases, debtors do not have any property or assets the Chapter 7 Trustee can take and then distribute among the debtors’ creditors. Once the trustee completes his or her investigation into the debtor’s bankruptcy petition and supporting documentation the trustee requests, and after the 341 hearing (also known as the meeting of creditors), the trustee will file a Report of No Distribution with the court. The purpose of the Report of No Distribution is to tell the court the debtor’s creditors will not be receiving any payments.

How do you get a Report of No Distribution?

Again, a Report of No Distribution from a Trustee means that you have no assets that can be taken and given to your creditors. You either have no assets whatsoever, or you are able to protect the assets you have through exemptions.

For example, in Florida, we have a Homestead Exemption, a motor vehicle exemption of $1,000, a personal property exemption ($1,000 when claiming the Homestead Exemption and $4,000 when not claiming the homestead exemption), and a retirement account exemption.

If you own your residence and it has equity in it, you can protect that equity by claiming the homestead exemption. If you are making payments on your vehicle and you have very little equity in the vehicle (up to $1,000), you can protect the vehicle my continuing to make your monthly payments and claiming the $1,000 motor vehicle exemption. Even your 401K can be protected.

In this scenario, which is very common, you would receive a Notice of No Distribution from your trustee as long as all of your personal property is worth no more than $1,000. Is it also key to note, that if you file with a spouse, you are entitled to double the amount in exemptions. By filing with a spouse, you would get an $8,000 personal property exemption (a $2,000 personal property exemption when also claiming the homestead exemption).

Is my bankruptcy case closed once I get a Report of No Distribution?

Unfortunately, not quite yet. But the only thing left for you to do is to wait. The 341 hearing is held relatively early in the bankruptcy process, roughly 30 to 45 days after you filed your bankruptcy petition. And the Report of No Distribution is generally filed right after that hearing. You will have to wait roughly another two months for your debts to be officially discharged and your bankruptcy case to be closed.

Just because you think you can protect all of your assets with exemptions and obtain a Report of No Distribution, it isn’t always that simple and straight forward. There are assets and issues you might not think to take into account. Not to mention that every trustee can and will act differently. One trustee might want to go after an asset while another might not see the effort as being worth their time. That is why it is so important always to consult and work with an experienced bankruptcy attorney before filing for bankruptcy. Contact the Law Office of David M. Goldman, PLLC today.

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