Anyone who files for bankruptcy is assigned a trustee. This is an impartial person appointed by the court system to oversee the case and ensure the bankruptcy filing is proper and determining whether there are any funds or assets available to distribute to creditors. The trustee’s duties include reviewing the debtor’s petition, investigating the debtor’s financial status and ensuring all assets and liabilities are properly disclosed.
The specifics of what a trustee does vary based on the type of bankruptcy in a particular case. His or her main objective is protecting the creditor’s interests. Trustees can collect property or liquidate non-exempt property in an estate, object to discharges or exemptions, and distribute funds to various creditors.
How Does a Trustees Role Differ between Chapter 7 and Chapter 13 Bankruptcy?
A trustee’s role is relatively limited in Chapter 7 bankruptcies. There are usually no assets involved, but in the rare instance there are, the trustee must liquidate those non-exempt assets and distribute the funds to the creditors. In most cases, Chapter 7 trustees oversee the bankruptcy, review the exemptions, and ensure the petition is accurate and all assets are disclosed. Chapter 7 trustees conduct creditor meetings and have the power to deny a discharge if they suspect fraud or perjury on the part of the debtor.
Chapter 13 trustees are far more involved in their cases. This type of trustee is typically assigned a geographic location in which he or she handles all Chapter 13 cases. The main duty of the Chapter 13 trustee is to ensure creditors are paid from the disposable income of the debtor. If there is non-exempt property of the Debtor, then the trustee must make sure the creditors are paid the value of this non-exempt property within the 3 to 5 year plan. The Chapter 13 trustee must make sure that creditors receive at least what they would’ve received had the debtor filed a chapter 7 and had this non-exempt property liquidated.
Chapter 13 trustees attend all hearings related to their assigned cases and are responsible for dispersing money to a debtor’s creditors.
The role of the trustee can be challenging. Their primary responsibility is to ensure creditors are paid, and along with that comes the responsibility of confirming the feasibility of the debtor’s plan. The best trustees work with a debtor to ensure that a plan is viable as that will better serve all involved in the long run.
An experienced bankruptcy attorney can help you prepare a realistic plan and troubleshoot any issues a trustee may have with your filing.
If you have concerns about how a trustee might view your case or you are considering bankruptcy and feel nervous about the process, you need to speak to a bankruptcy expert. Contact the law office of Frank J. LaPerch, PC at 845.942.5500 to schedule a Rockland bankruptcy consultation or to learn what he can do to support you through your bankruptcy.