When someone files for bankruptcy, regardless of whether he files Chapter 7 or Chapter 13 bankruptcy, he will most likely encounter a bankruptcy trustee. A bankruptcy trustee has tremendous influence over the debtor’s case. Trustees have various obligations regarding bankruptcy cases and work with both the debtor and creditors throughout the bankruptcy process.
People typically do not understand what a bankruptcy trustee does, which can cause them to feel anxious about meeting one. Learn about the role of a bankruptcy trustee to alleviate stress and understand your options.
What is a Bankruptcy Trustee?
The United States Trustee program appoints a bankruptcy trustee to a specific bankruptcy case. The trustee is typically well-versed in bankruptcy law and is responsible for overseeing the various aspects of the case. The bankruptcy trustee’s duties vary depending on the type of bankruptcy, the individual situation, and the debtor’s unique circumstances.
Chapter 7 Bankruptcy Trustee
The differences in the type of bankruptcy lead to contrasting duties for which the trustee is responsible. Chapter 7 bankruptcy is a liquidation bankruptcy case, meaning the trustee handles the selling and distribution of the estate. The trustee must:
- Compile the debtor’s non-exempt property
- Sell the bankruptcy estate property
- Challenge claims
- Distribute proceeds to creditors
In a Chapter 7 case, the bankruptcy trustee may be paid a percentage of the funds that he or she recovers for creditors, which is why it may seem that trustees side with creditors rather than debtors.
Chapter 13 Bankruptcy Trustee
Chapter 13 bankruptcy differs from Chapter 7 bankruptcy due to the fact that during a Chapter 13 reorganization bankruptcy, debtors keep their property. The trustee’s role, in this case, is to review and administer the Chapter 13 plan to creditors on the debtor’s behalf. The trustee is in charge of:
- Reviewing the debtor’s repayment plan
- Objecting to the plan, as appropriate
- Collecting payments from the debtor
- Distributing payments to the collector
Though the bankruptcy trustee can greatly influence what occurs during the proceedings, it’s important to note that they do not make final decisions. Any decision the trustee makes that the debtor does not agree with can be presented to the judge for further review.
In complicated bankruptcy cases, meeting with a bankruptcy trustee may feel intimidating. It’s important to have someone on your side who understands the bankruptcy trustee’s role and the interests he serves. Those who attain legal representation in bankruptcy ensure they protect their own interests throughout the extensive process.
Orum Young Law houses expert bankruptcy law attorneys that can be with you every step of the way. We have over 35 years of experience and have filed the most bankruptcies in Northeast Louisiana. Contact us at (318) 450-3192 for a free case evaluation.