When a Chapter 7 bankruptcy is filed, the bankruptcy court will appoint the trustee to investigate all assets that the petitioner owns. Sure, the trustee is responsible for managing all assets of the Chapter 7 bankruptcy petitioner.
If the trustee finds non-exempt property from the petitioner’s total assets, they’ll sell the property and distribute the proceeds to the creditors to pay off the petitioner’s debts. But in some cases, the trustee instead files a “Report of No Distribution,” also known as NDR, to the court.
Then, why does the trustee make the report instead of managing the petitioner’s assets? Now, it’s best for you to know what the Trustee’s Report of No Distribution means. Okay, let’s figure it out below!
Meaning of Trustee’s Report of No Distribution
If the trustee of the Chapter 7 bankruptcy files a Report of No Distribution (NDR), it means that the debtor has no exempt assets to turn over to their creditors.
Basically, the Report of No Distribution aims to notify the court that the trustee will not be making any payments to pay off the debtor’s outstanding debts since there are no assets that can be distributed to the creditors.
When a Report of No Distribution is filed by the trustee, the court will likely dismiss the bankruptcy case as soon as possible after issuing the discharge statement. Well, the trustee can usually file the report before or after your settlement is made.
Otherwise, if the debtor has non-exempt assets, the trustee will not file a Report of No Distribution. Instead, they will notify creditors about the deadline for filing evidence of claim in the debtor’s case.
How is a Report of No Distribution Made?
After conducting an investigation toward all of the debtor’s assets, the trustee will either manage the assets to be sold and distributed to creditors or make a Report of No Distribution.
In the case of non-exempt property, the trustee will file a Report of No Distribution with the court. The report contains important case-specific information about the debtor’s finances, including the amount of debt and value of assets.
In the report, the trustee will usually list “$0 assets” or “$0 claims scheduled for settlement.” Sometimes, they do not even list anything on the report, meaning there are no assets to report to the court.
Keep in mind that the Report of No Distribution is only a report that the trustee files to notify the court. Of course, it does not mean that your debts are discharged. Also, it does not differentiate between dischargeable and nondischargeable debts.
Example of a Report of No Distribution
The trustee will usually make a Report of No Distribution on their own, which essentially indicates that you have no assets to hand over to the creditor.
Here’s one example:
| “I, Billie Jean, am appointed as the court trustee to investigate the debtor’s estate on behalf of Michele Loinee. I have made a thorough investigation of all of the debtor’s assets and financial affairs, as well as the location of such property.
With this, I would like to report that there are no assets available for distribution to creditors from all non-exempt assets by law. Since I have not received any property, I will not make any payment for the property to the creditor. Pursuant to Fed R Bank P 5009, I declare that the debtor’s property has been fully managed by me. Therefore, I request that I be relieved from further duties as trustee.” |
How to Get a Report of No Distribution on Your Bankruptcy Case
It’s just simple.
A Report of No Distribution is made only if you have no assets available to be distributed to creditors. That means if you want to get the report on your bankruptcy case, you must have no non-exempt assets from being managed and handed over to creditors.
As long as all of your personal property is worth less than $1,000, you’ll usually receive a Report of No Distribution from your trustee. Additionally, you’re also eligible to double the amount of your exemption if you file with your spouse. That way, you could end up with an $8,000 personal property exemption.
Is My Bankruptcy Case Settled After Receiving a Report of No Distribution?
If you think that your debts are paid off and your bankruptcy case is closed after you receive a Report of No Distribution, you’re actually wrong.
If so, what you should do is wait for the hearing. Usually, the 341 hearing will be conducted early. It is about 30 to 45 days after you file the bankruptcy petition. And the trustee will file a Report of No Distribution right after the hearing. If you want your debts officially discharged and your bankruptcy case closed, you may need to wait another two months or so.
Don’t assume that you can protect all of your assets simply by obtaining a Report of No Distribution. Sure, it is not always that simple and easy. Well, you may not think that there will be assets and issues to consider.
Keep in mind that each trustee’s actions and policies may vary. Some may continue to pursue your assets. While others are unwilling to do so since it is not worth their time. So, it’s important for you to always consult with an experienced bankruptcy attorney before you decide to file for bankruptcy.
What Are the Types of Assets in a Chapter 7 Bankruptcy?
Federal and state laws define exempt and non-exempt property for Chapter 7 bankruptcy.
Well, the exempt property is a type of property that you own, but you can protect them from seizure due to unpaid debts. The exempt property can vary by state, but generally it includes:
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- Personal property includes clothing, home furnishings, appliances, household goods, and jewelry up to a particular value.
- Motor vehicle, up to specific value
- Retirement accounts
- Alimony and child support
- Life insurance policy
- Pensions
- A portion of the equity in your home
- Equipment of your trade activities or professional support, up to a certain value
- Compensation awarded for personal injury
- Public benefits, including social security, public assistance (welfare), and unemployment compensation, are accumulated in a bank account.
In addition to exempt property, there are also non-exempt assets that you must hand over to the creditor if you have outstanding debts. Here they are:
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- Family heirlooms
- Pricey musical instruments
- Collections of coins, stamps, and other valuable items.
- Bank accounts, cash, bonds, stocks, and other investments
- A second home or vacation home
- A second car or truck
Well, those are exempt and non-exempt property under the Chapter 7 bankruptcy.
Conclusion
The trustee will file a Report of No Distribution, as long as the debtor has no non-exempt property to be distributed to the creditor to settle the unpaid debt.
But if the debtor has assets available to be turned over to creditors, a Report of No Distribution will not be made; the trustee instead will notify creditors about the deadline for filing evidence of claim in the debtor’s case.
