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Unclaimed funds arising
from bankruptcy proceedings consists of money that has not been claimed
by individuals and businesses owed funds by those who have filed
personal or corporate bankruptcy. Bankruptcy courts hold in excess of
$200 million in unclaimed cash owed creditors who either are unaware
they're owed funds, or have moved, changed name or address after
marriage or divorce, or simply have forgotten over the period of years
that typically are required to resolve a bankruptcy case.
There were 1.6 million personal bankruptcies in 2010, up sharply from
previous years due to the poor economy. A record number of corporations
have also filed for bankruptcy over the last few years, including some
of the largest ever: General Motors, Chrysler, Washington Mutual (WaMu),
Lehman Brothers, WorldCom, Enron and United Airlines, to name a few.
Pursuant to the U.S. Bankruptcy Code, a trustee is appointed by the
court to liquidate assets. The cash obtained from the liquidation of
assets is distributed to creditors, vendors and shareholders pursuant to
the code, which stipulates payment priorities. Secured creditors - those
with collateral - come first; followed by unsecured creditors and
stockholders.
Trustees often aren't able to locate those owed money, however,
particularly in the case where a creditor lives in another state. In
addition, trustees have a substantial cache of checks that were sent
out, but were undeliverable because the payee no longer resides at the
address on record. Because bankruptcy laws are administered by federal
courts in 94 judicial districts, these monies do not come under the
purview of state unclaimed property statutes.
If you believe you are entitled to collect unclaimed funds from a
bankruptcy filing - either as a creditor or someone who has filed for
bankruptcy - you must initiate a search with bankruptcy courts and
trustees directly. Order our Special Report: Bankruptcy Court Unclaimed
Funds Search.
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