There is a tendency to view authority figures and those with any control over one’s life as an adversary – maybe even an enemy. This is especially true when we have made mistakes. If we feel out of control, someone stepping in and taking control can be intimidating. This is often the case when a person files for bankruptcy and must work with a bankruptcy trustee.
The good news is the trustee is not there to act as your enemy and cause you harm. Your trustee is there to ensure everything goes as it should during your bankruptcy. They are neither friend nor foe, and are there to perform their job: to inquire as to whether there are assets that can be distributed to creditors.
The good news is that most filings are called “No Asset” cases, where there is nothing to distribute to creditors. It doesn’t mean you have no assets, it just means whatever assets you do have are exempt under state or federal law. This represents the vast majority of cases.
What should you know about your bankruptcy trustee?
Each bankruptcy case is assigned a trustee. The trustee’s role is to oversee the bankruptcy and ensure debts are paid from any non-exempt assets. The specific things a trustee does vary from case to case. Sometimes he or she must collect property or liquidate non-exempt assets, but not all bankruptcy cases include assets, in fact most do not.
Chapter 7 vs. Chapter 13 Trustees
The role of a trustee varies between Chapter 7 and Chapter 13 bankruptcy cases. Chapter 7 requires only limited actions from a trustee because there are usually no assets. This role is dramatically increased in Chapter 13 bankruptcies, where the trustee’s main duty is to manage the finances of the debtor to ensure creditors are paid. Trustees attend all hearings and are responsible for making sure creditors receive the money they are owed under the bankruptcy repayment plan. The role and limitations of bankruptcy trustees are further explained here.
If you file for Chapter 13 bankruptcy, your attorney will be working with the trustee to get your plan confirmed with the court. From that point, you simply pay to the trustee the agreed upon monthly amount and the trustee distributes those funds to the creditors.
Trusting Your Trustee
The idea of your financial future being overseen by a third party, like a trustee, can be intimidating, but you should not consider the trustee your enemy. They are not out to take your property. An experienced bankruptcy attorney will have made sure any property you have is exempt before filing. If there is an issue with property that is non-exempt, your bankruptcy attorney would discuss that with you beforehand so you can prepare to either surrender that property or negotiate a settlement to keep it. The key is in the preparation so there are no surprises. An experienced bankruptcy attorney will often know ahead of time what assets or specific issues in your case will be of interest to the trustee.
Except for rare circumstance, bankruptcy is a voluntary process and the trustee is just part of that process. The vast amount of cases will see the trustee confirming what you have put in your petition and making sure it’s accurate. They are not there to trick you.
Accepting this and having a positive attitude toward your trustee can make the experience much easier.
If you have questions about the role of the trustee or you are ready to take action and file for bankruptcy, a bankruptcy attorney can help. And in the rare event your trustee acts inappropriately, you have a right to take action. Your attorney can advise you on how to proceed in these cases.
For more information or to begin the paperwork to file for bankruptcy, contact the law office of Frank J. LaPerch, PC at 845.942.5500 to schedule a consultation or to learn what he can do to support you through your bankruptcy.