Some cases result in the surrender or liquidation of non-exempt assets. There are known as asset cases. In an asset case, the trustee sends notice to creditors advising them that they must file a claim by a certain deadline. In the meantime, the funds are held in a separate account known as the bankruptcy estate. After the claims filing date has passed, the trustee will review the claims filed for any discrepancies and file objections to claims that don’t meet legal requirements (proof of debt).
The trustee then pays all the timely filed claims a pro rata share of funds from the estate which means the largest creditors receive more than smaller creditors. Certain creditors such as the IRS and holders of domestic support claims will be paid first. Some creditors may receive nothing if there are no funds left after paying priority claims.
Once all the creditors have received their portion, the trustee calculates his time and costs and enters a fee application with the court. Once approved, the trustee’s fees are paid from the estate. The trustee files a final accounting of all funds paid to creditors with the court.