What to Expect from a Bankruptcy Trustee?… During bankruptcy application you might wonder what to expect from the bankruptcy courts? You might think that you have to spend a lot of time interacting with the judge and the creditors in a court room; however, this is not the case. In 1978 under the Bankruptcy Reform Act, the US Trustee Program was created. Under this program, trustees are tasked to serve federal judicial districts in 48 states. These are divided into offices, where each office has one US Trustee with a workforce that includes bankruptcy specialists, lawyers, and paralegals.
As there are a lot of bankruptcy cases that a trustee handles, there is an alternative solution to this. Aside from these trustees, there are court-appointed private trustees as per US Trustee Program’s recommendation. The role of the said office will now be to train and supervise these trustees and their work. The US trustee’s role will now be to make sure that the regulations and provisions of the bankruptcy laws are properly carried out by the private trustee.
If you are a debtor filing for bankruptcy application you might what to expect from a bankruptcy trustee. This trustee is randomly appointed by the bankruptcy courts to help in a variety of tasks. The varied roles of a trustee may include mediating bankruptcy cases, administering the means test, reviewing each bankruptcy case filed and checking to make sure that there are no discrepancies in the application and reviewing the cases for the possibility of fraud. The trustee is also tasked to identify the plight of the creditors, and if possible, come up with a resolution to keep a fair solution to both the debtor and the creditors. Since the trustee is court-appointed he can also file for motions and takes on the role as the court’s representative in a bankruptcy case.
There are two most common types of bankruptcy protection, and for each program, the trustee performs different roles. Here’s a summary of the trustee’s role:
Chapter 7 – For this bankruptcy program, it is the role of the trustee to review the petition of the debtor. He is in charge of conducting the means test to determine the eligibility of the debtor for Chapter 7 through formulaic computations. If the debtor does qualify, it is the trustee’s duty to serve as a mediator between the debtor and his creditors. It is also the trustee who will liquidate the non-exempt assets and pays off the creditors from the proceeds of the sale. It is his duty to eliminate dischargeable debts left after the liquidation as deemed necessary.
Chapter 13 – A trustee’s role in this bankruptcy program is different from the previous one. It is his duty to assist the debtor in devising the repayment plan. Once this is approved by the court, the trustee oversees the implementation of the whole plan. The debtor will have to remit his payments to the trustee who will, in turn, distribute the funds to the creditors based on the priority structure designated by the court. In the event that you’ll miss your plan’s payments, the trustee will help you get back on track and will even give you another chance should you need it.
A trustee’s role is defined in such a way that he’ll be able to meet the debtor’s, as well as the creditors’ needs. It is his intention to represent the bankruptcy court and protect the integrity of the federal system.