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First payment is made upon secured claims, according to statutory
priority. Secured tax claims and statutory liens are paid first, then
general secured claims. As a last priority, general unsecured creditors
receive a pro ratta distribution of remaining assets, if any. In most
cases filed under Chapter 7, no assets are available for distribution
from individual estates because of the application of appropriate
exemptions.
In a few cases however, individuals must surrender non-exempt assets
voluntarily or suffer property seizure. The trustee is entitled to costs
of administration, after deducting third party expenses, which renders
ordinary personal property for used goods almost worthless. Larger
assets, including real estate, vehicles, boats and financial accounts,
are far more likely to be subject to an order for turnover.
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