How does the trustee handle my debts in a Chapter 7 Bankruptcy?

In California, a Chapter 7 Bankruptcy is utilized when the debtor cannot pay his or her debts. In this type of bankruptcy, the debtor’s assets are liquidated to pay off creditors. The trustee, an individual appointed by the bankruptcy court, oversees the liquidation of the debtor’s assets and pays off the creditors. The trustee has the power to look through the debtor’s financial statements and records to identify any assets that may be sold to pay off the debt. The trustee may also investigate the debtor’s spending habits to ensure that no fraud or other wrongdoing has occurred. Once the assets have been liquidated, the trustee will use the proceeds to pay off the creditors in the order specified by the bankruptcy court. Depending on the type of debt and jurisdiction, certain debts may be paid off at a different rate than others. For example, in California, debts that are considered “secured” are prioritized and receive payment first. The trustee may also file a motion to abandon certain assets that are not eligible for liquidation or are of no value to the creditors. Once all the creditors have been paid, the balance of the debtor’s estate is distributed to the debtor. In general, the trustee’s responsibilities include collecting and liquidating the debtor’s assets, paying off creditors, and filing motions related to assets and the distribution of funds.

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How does the trustee handle my debts in a Chapter 7 Bankruptcy?

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