What is a Bankruptcy Trustee?
A U.S. Bankruptcy Trustee, also known as a Trustee in Bankruptcy, is an individual or an entity who is appointed by the U.S. Department of Justice to administer a bankruptcy case. Chapter 7 and 13 trustees are typically professional accountants or attorneys.
Depending on the nature of your bankruptcy proceedings, you may have limited interaction or numerous exchanges with the bankruptcy trustee assigned to your case. For example, if you are filing Chapter 13 bankruptcy, you can expect to have more frequent involvement with your trustee than if you are filing Chapter 7 bankruptcy.
The bankruptcy trustee’s objective is to protect the interests of the creditors involved in the case, not those of the debtor. Individuals and couples filing Chapter 13 or filing Chapter 7 bankruptcies should be prepared to protect their interests, assets and property before meeting with a bankruptcy trustee. Hiring an experienced bankruptcy attorney to negotiate and communicate with the trustee on your behalf is a wise investment.
Chapter 13 Trustee
A bankruptcy trustee plays a larger role in Chapter 13 cases than in Chapter 7 cases. Individuals or couples filing chapter 13 will note the trustee plays a dual role. The trustee’s main function is to ensure that the creditors’ receive fair and timely repayment of outstanding debts. In order to achieve this, the bankruptcy trustee will work with the petitioner to reorganize debts and schedule a repayment plan. Once the reorganization, payment plan and schedule are approved, the bankruptcy trustee assumes responsibility for receiving the debtor’s monthly payments and distributing them to creditors.
A certain amount of negotiation and a thorough understanding of bankruptcy law are required of the bankruptcy trustee so that they may endeavor that both the creditors’ and debtor’s interests are upheld in accordance with the laws of the U.S. Bankruptcy Code. The only way for a petitioner to guarantee their best interests are being represented is to retain the counsel of a bankruptcy attorney.
Chapter 7 Trustee
In Chapter 7 bankruptcy cases, the bankruptcy trustee plays a minimal role in the proceedings. Individuals and couples filing Chapter 7 liquidation will first encounter their Chapter 7 Trustee at the Section 341 Creditors’ Meeting. At this meeting, the trustee will review all creditor lists, financial documents, assets and exemptions that you and/or your lawyer submitted when filing Chapter 7 bankruptcy.
Just as the trustee’s role in Chapter 13 cases is to protect the interests of the creditors, the same is true for Chapter 7 Trustees in Bankruptcy. The Chapter 7 bankruptcy trustee must aim to satisfy the creditors’ claims through the liquidation of the debtor’s non-exempt property or assets. The trustee oversees the sale of non-exempt property and assets, and distributes the proceeds to pay the balance owed to priority creditors. Most individuals and couples filing Chapter 7 bankruptcy petitions are classified by trustees as “no asset” cases, and therefore no property is lost.
Bankruptcy questions and answers
Above all else, remember the Bankruptcy Trustee represents the interests of the creditors in both Chapter 7 and Chapter 13 bankruptcy cases. A bankruptcy attorney can answer most of your bankruptcy questions and answers, and is in the best position to address concerns you may have about dealing with a bankruptcy trustee. If you choose to enter bankruptcy proceedings without the assistance of bankruptcy lawyers to oversee your case, you may still benefit from contacting a legal professional to answer basic bankruptcy questions and answers prior to filing Chapter 7 or filing Chapter 13 bankruptcy.