What is a Bankruptcy Trustee?
If you have begun to research bankruptcy, or if you have failed and are looking forward to the next steps, you are probably wondering who this mysterious trustee is in your bankruptcy case. Can this trustee be trusted? Should you trust the trustee or does the creditor trust the trustee?
The role of the trustee is to oversee the bankruptcy case from the filing to completion — they are not on your side, nor are they on the side of the creditor. They are there to push your case through to completion, monitor for anomalies, and prevent fraud. They are appointed by the court and their goal is simple: to keep everyone honest but also to push this case through to completion, including the discharge of your debt, if applicable for your filing.
What Does a Bankruptcy Trustee Do?
Consider the bankruptcy trustee administrator whose job it is to move the case forward and to keep everyone honest. The bankruptcy trustee will inventory assets, debts, and claimed exempt property, examine your income, and analyze all of the creditor claims that have been filed against you. They oversee the sale of assets, the repayment of creditors, and repayment plans when those are a part of the filing. Ultimately, they just want the same thing you do: for the case to end successfully. You can make their job easier, and the likelihood of your case being a successful filing, by working with a professional attorney to prepare clear and honest paperwork so the bankruptcy trustee has to do less investigation and more administration.
Chapter 7 Filings
In a chapter 7 case — the kind where your bankruptcy filing ultimately seeks to discharge some of your debt after your excess assets are liquidated and the proceeds are used to repay some of your debt — the bankruptcy trustee essentially follows the following steps:
- Review the paperwork
- Sell the bankruptcy filer’s non-exempt property
- Evaluate the claims of creditors
- Evaluate the filer’s paperwork, including income, assets, and debts
- Distribute proceeds of the property to creditors
- Find any grounds to object to a bankruptcy discharge, such as where the filing party has committed fraud
Chapter 13 Filings
Chapter 13 filings do not involve the sale of assets. Instead, the debtor files a repayment plan with the court which is overseen by the trustee, which includes receiving payments from the filer and distributing the proceeds to the creditors. These repayment plans last for years, so the trustee will be involved in the case for a long time. Cases generally follow the following steps:
- Review the paperwork, including the proposed repayment plan filed by the debtor
- Make any objections to the payment plan
- Receive payments from the filing party and distribute the proceeds to the creditors, according to the initial repayment plan
Trustees are Vital to the Success of Your Filing
It is natural to wonder whether the trustee is on your side. The truth is, they are not on any side. They simply want the cases to go smoothly and for no fraud or underhanded behavior to happen, whether that be bad behavior from the filer (such as hiding assets) or from the creditors, who are not exactly known for their reputable practices.
Even still, you may want to know how to stay on the good side of the trustee: After all, they are the ones overseeing your case, and if they are suspicious or frustrated with sloppy paperwork, they may draw out the process by investigating your filing more closely. As we mentioned, they want things to go smoothly. The best way to ensure this is to get someone with experience to help with your paperwork. An attorney can guide you on the paperwork, as well as tell you what decisions with regard to your paperwork may raise red flags and draw your case out longer.
Our network of attorneys includes experienced attorneys in your area that can guide you from filing to completion of your case, whether that means to discharge or a successful repayment plan. Vitally, they can help you file clear paperwork that empowers the trustee to guide your case through the system smoothly, ensuring your fresh financial start comes sooner, rather than later. Get started today with a consultation from one of our attorneys.