05 Aug 2013

What To Do in CaseLink Web When Creditors Won’t Cash Checks

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Trustee Tip:

What To Do in CaseLink Web When Creditors Won’t Cash Checks

As a case is winding down and you need to begin the distribution of funds, the returning of these funds can be one of the most frustrating aspects of closing a case. Lately, we have seen trustees and their assistants having to deal with a large increase in returned funds.  One reason why can be attributed to the fact that the IRS is no longer withdrawing claims paid by the debtor or other party.  On the other hand, some creditors have already taken and written off the loss and don’t feel that it’s worth the effort to account for the funds. Other times, the creditors simply can no longer be located so a check never gets delivered. Either way, the distribution and accounting for all funds in a given case is something that needs to be completed in order for you to close out your cases.

With the IRS no longer withdrawing claims BMS has received an increase in calls requesting assistance with unclaimed funds. The tips provided are intended to help you with finalizing and closing out your cases.

How to Handle Unclaimed Funds

The following scenarios are not localized to one particular region. Across the country, trustees and their assistants have found themselves having to deal with similar situations.

Scenario One: Check Returned as Undeliverable

As you already have physical custody of the check, simply log into CaseLink Web and follow these simple steps:

1)       Go to Adjustments.

2)       Choose Negative Disbursements

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3)       Next, link the check to the original claim. You will use the same tcode from the initial payment.

4)       Then, write a check to the US Bankruptcy Court.

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5)       The final step is to link the check to the claimant, click Add Item.

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Scenario Two: Check Not Returned but goes Stale

Once you have exhausted all of your resources in trying to find the creditor, place a Stop Payment on the stale check.  You will need to wait one business day for the stop payment process to conclude.  Once the stop payment is in place, follow the same process as in Scenario One above.

Check How Unclaimed Funds Appear in the TDR Display

Check the TDR to make sure the transaction displays correctly. Otherwise, you will not be able to close your case. Keep in mind that transactions are stacked top to bottom when displaying transaction history.

When Funds are Refused by Creditors

When funds are refused by creditors, they should be calculated for redistribution. Completing a supplemental distribution uses the same process as the initial distribution…with one caveat:  when running the supplemental distribution, make sure to exclude the claimant who returned the funds from the supplemental distribution.  You do not want to send them a second check that they will not cash again.  If you need to exclude the creditor, deselect the claim during the distribution before you proceed.

If you have any questions on how to run any of these processes in CaseLink Web, contact the BMS Support Center via email or call 800-634-7734 ext. 6.

If you have another situation that you need help resolving, please let us know by sharing your comments below. We are always here to help.

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