Everyone must understand that filing a bankruptcy is not running FROM your creditors, it is like running TOWARD your creditors! And the Chapter 7 Trustee is like all of your unsecured creditors rolled up into one person.
In addition, the Bankruptcy Code gives the Chapter 7 Trustee, as of the date you filed bankruptcy, all of the powers that someone with a judgment lien on all of your property has. This makes the Chapter 7 Trustee very powerful, indeed.
A Chapter 7 Trustee has the power to liquidate (that is, take and sell) all of your non-exempt assets. See my prior blog post on the topic of exemptions here:
In addition, the Chapter 7 Trustee can pursue persons to whom you have transferred money or other property for as far back as four years before filing bankruptcy.
So, when you file a Chapter 7, you must go into it with your eyes open to the fact that if you have non-exempt assets, or if you have transferred assets to others before filing, the Chapter 7 Trustee will demand money from you or (s)he will liquidate your non-exempt assets and/or pursue the persons to whom you made the transfer(s).
Even a person with a modest amount of assets can be the target of a Chapter 7 Trustee demand. The key is getting good advice from an experienced and ethical consumer bankruptcy attorney. Beware of the attorney that only files chapter 7s and tells you in the consult, “don’t worry, don’t worry, don’t worry”.
There can be plenty to worry about in a Chapter 7.