In a New York City Chapter 7 Bankruptcy Case there are several events which take place before a debtor receives a discharge. First a petition is filed and a 341 meeting of creditors is held. At this meeting the Trustee will review all of the assets and liabilities of the estate and decide whether there is any non-exempt assets that are available to the creditors of the estate. If the Trustee is able to find such assets and sell them the Trustee is entitled to 10%(varies by jurisdiction) of the value he distributes to creditors. For this reason you will see a Trustee’s eyes light up if there is a substantial asset for him/her to liquidate for the benefit of the Estate. Once the Trustee has performed a “diligent inquiry” into the estate she should abandon any assets that have no or nominal value to the creditors. So if there is a $20,000 house in detroit that is deemed unsellable then the trustee may abandon the house and the debtor or secured property holder keeps the house.
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