United States Bankruptcy Trustee

The Executive Office of the United States Bankruptcy Trustee is a branch of the United States Department of Justice.  They are responsible for the administration of bankruptcy cases which also has authority to contract with agents to serve certain roles in the program which means that for bankruptcy cases, they can appointment “interim trustees.” In Chapter 7 and Chapter 13 cases, that means the appointment of “interim trustees.” “Interim trustees” can be private companies, lawyers and law firms.  They do not have to be government employees. Usually they are lawyers from within the area where the case is filed and are appointed by the US Trustee’s office too manage the bankruptcy cases. There can be a number of interim trustees in each jurisdiction.  They are randomly assigned to bankruptcy cases in the area they service.

Interim Bankruptcy Trustee

The Interim Bankruptcy Trustee’s job is to review the bankruptcy cases.  This includes the petition and schedules filed with the court. Additionally, they can look into your entire estate and investigate to ensure that there isn’t property that a person filing bankruptcy failed to list in their bankruptcy documents.  Moreover, the interim trustee will review your income and expenses as well as any other calculations on your filing. This ensures that you and your bankruptcy attorney are not violating any bankruptcy codes.  The Trustee is the person that you will be seeing at your initial court date called the Meeting of Creditors also called the 341(a) Hearing.  Here the Trustee will ask a series of questions to verify and address the information provided on the bankruptcy petition and filings.

The Meeting of Creditors

After the Meeting of Creditors, the trustee will determine whether the case is an asset or no asset case.  The Bankruptcy Trustee will then file a “Report of No Distribution” or “No Asset Report” or a “Report of Assets.”

If you have unprotected (or non-exempt assets) the Trustee is required by law to sell non-exempt assets and distribute money to creditors. This is why people call Chapter 7 a liquidation case.

Bankruptcy Liquidation

However, in most Chapter 7 cases, all of the debtor’s property is exempt, and there is nothing for the trustee to liquidate. Each state has its own exemptions, and sometimes federal exemption law applies.

The bankruptcy trustee can sell assets including homes, vehicles, and cars.  Additionally, they can take the money from bank accounts, and sell stocks, CDs, bonds etc. The Trustee uses this Liquidation process to gather funds to pay your creditors.  If creditors are paid in full during this process, you will receive any excess funds.

Bankruptcy Discharge

At that point, the case will be concluded.  If there were not enough funds to pay your creditors, then the rest of the debt will be discharged.  However, as stated earlier, in most cases, most debtors do not have any unprotected property for the trustee to sell.  Contact Orange County bankruptcy attorneys to determine whether your assets will be protected in bankruptcy.