The Bankruptcy Trustee
When someone files for bankruptcy, regardless of whether they file Chapter 7 or Chapter 13, they will most likely encounter a bankruptcy trustee, who 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. Furthermore, bankruptcy is already an extremely stressful and emotional process, and adding another party to the equation can make it even more so. Bankruptcy attorneys, however, are an essential part of the process and, by understanding their role you can have a better bankruptcy experience. 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.
In every bankruptcy case, the bankruptcy trustee will examine the debtor. This does not mean that the bankruptcy trustee is there to act against the debtor’s interests. During an examination, the trustee works to determine that the debtor’s statements regarding their debts and assets are true.
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. In a liquidation case, the individual filing bankruptcy must liquidate their available assets to pay back creditors. Therefore, when filing Chapter 7 bankruptcy, 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.
Know Your Rights Regarding Bankruptcy Trustees
Although it might seem like all parties are against you when you file bankruptcy, that’s not true. A bankruptcy trustee is a logistically neutral party that is present only to ensure the process is carried out according to law. In complicated bankruptcy cases, however, 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.
Knowledgeable Bankruptcy Attorneys Near You
Bankruptcy attorneys exist to help you through the bankruptcy process. If you’re filing for bankruptcy, you don’t have to go through it alone. A knowledgeable bankruptcy attorney understands both Chapter 7 and Chapter 13 bankruptcy and everything else that goes along with filing for either one – including bankruptcy trustees.
In the state of Louisiana, there’s no better bankruptcy team than the lawyers at E. Orum Young Law. Trusted and knowledgeable, E. Orum Young Law houses expert bankruptcy law attorneys who can be with you every step of the way. Some of the E. Orum Young Law Firm attorneys are members of the National Association of Consumer Bankruptcy Attorneys. We have more than 35 years of experience and have filed the most bankruptcies in Northeast Louisiana. Contact us at (318) 450-3192 for a free case evaluation.