bankruptcy trustee

Who is the Bankruptcy Trustee

A bankruptcy trustee is a key player in any bankruptcy case. In every individual case of consumer bankruptcy, regardless of whether it is Chapter 7 or Chapter 13 bankruptcy, there is an appointed bankruptcy trustee who has various obligations and powers. The powers of a trustee depend on the size and scope of the case.

The Role of The Bankruptcy Trustee

The role of the bankruptcy trustee can often confuse people since people believe that a judge oversees all cases. In a bankruptcy case, the trustee serves as the person who is in charge of your entire bankruptcy estate. It is important for you to have a bankruptcy attorney representing you in your Chapter 7 or Chapter 13 bankruptcy case.

In order to get a better understanding of what a bankruptcy trustee does, you need to first understand the concept of a bankruptcy estate. Under bankruptcy law, when somebody files for a bankruptcy, it automatically creates a bankruptcy estate of the debtor’s property. An easy way to understand this is to compare your bankruptcy estate to the estate of a deceased person. Just like with a will, under bankruptcy law, your estate becomes its own individual separate legal entity.

In fact, under bankruptcy law, the bankruptcy estate is completely separate from the bankruptcy debtor. The separation is primarily to create a wall of separation between the debtor and the assets. The separation is also an important step in any bankruptcy proceeding. Once the bankruptcy estate has been created, there is a need for a bankruptcy trustee.

Because the bankruptcy estate is not actually a person, a bankruptcy trustee steps in to play the role of overseeing the estate and performing various duties, as required by the law. A Bankruptcy judge appoints Trustees to oversee the bankruptcy case and manage the estate.

Duties of the Bankruptcy Trustee

Under a Chapter 7 bankruptcy, the powers and duties of a trustee involve the following:

  1. The trustee is in charge of selling all of the bankruptcy estate property, with the exception of exempt property
  2. The bankruptcy trustee is therefore in charge of rounding up all of the debtor’s property
  3. The trustee is in charge of distributing the proceeds of the sale to the creditors
  4. Since the bankruptcy trustee represents the interests of the bankruptcy estate, one of the duties of the trustee is to challenge any creditor’s claims where it is appropriate
  5. Finally, the trustee is also in charge of objecting to a discharge of the bankruptcy if the grounds exist for the objection

Under a Chapter 13 bankruptcy, the power and duties of the bankruptcy trustee involve the following:

  1. Since a Chapter 13 bankruptcy involves paying back some, or all, of the debtor’s obligations, the trustee is charged with reviewing the debtor’s proposed repayment plan
  2. If necessary, the bankruptcy trustee objects to the plans if they finds problems like an inability to make payments, or the plan is too lenient
  3. Finally, the trusteereceives and collects the payments from the debtor pursuant to the established payment plan. Then the Trustee distributes the payments to the creditors

To discuss what a trustee does in further detail, call our office.

NOTE: This is for informational purposes only and does not constitute legal advice.