A bankruptcy trustee is an administrator assigned to your case if you file for bankruptcy.
Trustees are assigned in several types of bankruptcy, including Chapter 7 and Chapter 13, which are the two types of bankruptcy that we’ll focus on here.
Bankruptcy trustees have some important duties: They review your financial documents to make sure your financial information is complete and correct, and they recommend whether the court should dismiss your bankruptcy case.
Trustees can have a big impact on a bankruptcy case, so it’s important to understand what they do.
The Trustee’s job is to administer the bankruptcy estate, to make sure creditors receive as much money as possible, and to preside over the first meeting of creditors. The Trustee either collects and sells non-exempt estate property and distributes the sale proceeds to creditors as in a Chapter 7 case or collects payments from the debtor and pays out money on a repayment plan, as in Chapter 13 cases.
The Trustee is not your attorney and you should NOT seek legal advice from them as they cannot provide it.
Who is a trustee?
Trustees have been a part of the bankruptcy system in the U.S. for more than 150 years. The role was created so that creditors and courts wouldn’t have to be responsible for collecting and distributing a bankruptcy debtor’s property.
Trustees are assigned by the United States Trustee Program, which is part of the U.S. Department of Justice.
Today, bankruptcy trustees are private individuals (or corporations) supervised by both the court and U.S. trustee officers. This arrangement helps provide the debtor with an impartial party to take charge of their assets.
What does a trustee do?
One of the trustee’s responsibilities in doing this is to make sure your bankruptcy claim is not fraudulent.
In addition to ensuring you have a legitimate claim, your trustee in a Chapter 7 bankruptcy is responsible for managing your assets. That includes …
- Collecting your property
- Converting your assets to cash
- Distributing the proceeds to your creditors
The trustee will also facilitate the meeting of creditors.
In a Chapter 7 bankruptcy
The main job of a Chapter 7 bankruptcy trustee is to sell your nonexempt property and repay your creditors as quickly as possible. (In a bankruptcy case, an exempt asset is property you get to keep. Exemptions can vary from state to state.)
The Chapter 7 trustee is also required to decide if your nonexempt property can be sold in order to pay back a significant portion of your debt. If so, you’ll have to turn that property over.
In a Chapter 13 bankruptcy
A Chapter 13 trustee is responsible for overseeing your repayment plan. That includes …
- Making sure your plan is reasonably affordable
- Collecting your payments according to the plan
- Distributing payments to your creditors
The trustee also holds the meeting of creditors in a Chapter 13 bankruptcy.
We invite you to contact us either online or by phone at 404-919-7296 to schedule a FREE confidential consultation to review your personal financial situation and what options we can provide to protect you from creditors. For additional information about bankruptcy please also check out our YouTube Channel which has up to date vlogs on issues related to personal bankruptcy.