Who is a Bankruptcy Trustee and What Do They Do?

A trustee is an individual appointed by the federal government in charge of overseeing bankruptcy proceedings. Chapter 7 bankruptcy and Chapter 13 bankruptcy trustees are usually bankruptcy attorneys or accountants.

Regardless of whether you file a Chapter 7 or Chapter 13 bankruptcy, a trustee will be appointed to your case. The trustee’s main function is to ensure that the debtor complies with rules and regulations, and is not being deceitful or committing fraud.  The appointed trustee will examine the bankruptcy filing to make sure there is no fraud involved. The trustee may request additional documents from the debtor in order to verify the information in the bankruptcy petition is accurate and truthful. If the trustee suspects fraud, he/she may seek to have the case dismissed.

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The role of the trustee differs under different chapters of the Bankruptcy Code. Examples of specific duties of a Chapter 7 trustee and Chapter 13 trustee are as follows:

Chapter 7 Trustee

The Chapter 7 trustee’s primary role is to look at any property and assets listed in the bankruptcy and determine which assets (if any) are not protected. The trustee is looking for anything of value that he/she can sell to pay back your creditors. The trustee oversees the process of selling any assets and equally distributing the proceeds to your creditors.

Chapter 13 Trustee

A Chapter 13 bankruptcy consists of paying back all or part of your debts over three to five years. The Chapter 13 trustee is responsible for reviewing your repayment plan and will oversee this repayment process making sure everything goes according to plan. In a Chapter 13 you will be required to send a payment to the trustee every month. One of the main duties of a Chapter 13 trustee is to ensure the debtor makes their monthly payments so he/she can disburse those payments to the creditors according to the debtor’s confirmed plan.

7 replies
    • Damon Duncan
      Damon Duncan says:

      It really depends what you mean when you say settle on your behalf. Typically, a Trustee wants to recover as much money as possible for the creditors in your case. At the same time, they understand they have to balance this with settling the estate in a reasonable time because the more time they spend on something the less money they can make for the creditors. If you contact a Trustee then you can typically begin the settlement process. However, a Trustee cannot reach a “settlement” with you unless you agree to it. They can go after any non-exempt equity if it exist without your permission if a settlement does not occur first. I hope this answers your question.

      Duncan Law Team

      Reply
  1. Cary
    Cary says:

    What is the trustee’s duty as it relates to securing the assets of the debtor if a third party took possession of the assets (without any legal claim to them)? The third party took possession of the assets by signing a lease.

    Reply

Trackbacks & Pingbacks

  1. […] in a Chapter 13 bankruptcy, you must get permission from the bankruptcy Trustee to incur any new debt. This includes a mortgage if you want to purchase a new house. When you are […]

  2. […] how much you are estimating that they will be paid for the duration of the bankruptcy.   Both the bankruptcy Trustee and the creditors have the option of reviewing the plan and either accepting or objecting to the […]

  3. […] they will usually resume sending monthly statements to you.  However, in many cases the Chapter 13 bankruptcy Trustee will be paying the mortgage on your behalf so contact your attorney prior to sending any payments […]

  4. […] you ask the Chapter 13 Trustee’s office or the bankruptcy court to reduce your Chapter 13 plan payment they will look at your income […]

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