What is a trustee in bankruptcy?

Practically every consumer bankruptcy case will have a bankruptcy trustee. This trustee can be either a Chapter 7 or Chapter 13 bankruptcy trustee. Each case is different.

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The Bankruptcy Trustee and the Bankruptcy Estate

It is important to have a good understanding of what a trustee does and who they are. A bankruptcy estate is a collection of debtor’s assets that is created when someone files bankruptcy. The bankruptcy estate is a separate legal entity from the bankruptcy debtor.

The bankruptcy trustee will be responsible for overseeing the bankruptcy estate, as the bankruptcy estate does not exist as a person. The trustee will fulfill various duties as required by law and depending on the bankruptcy case. The trustee is a person who is appointed to supervise a specific type of bankruptcy case or group of bankruptcy cases.

What does a Bankruptcy Trustee do?

The duties of a bankruptcy trustee vary depending on the case and the particular circumstances of the debtor and their creditors. A bankruptcy trustee’s duties will vary depending on the type and circumstances of each case. However, the following are the basics of their duties.

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Chapter 7 Bankruptcy Cases: The Trustee

Both Chapter 7 and Chapter 13 have similar duties and powers for trustees. Many of the differences are due to the different types of bankruptcy. These are the main duties and powers that a trustee has in a Chapter 7 bankruptcy liquidation case.

  • All of the property belonging to a debtor should be rounded up
  • The property of the bankruptcy estate can be sold
  • Where appropriate, challenge creditors’ claims
  • Distributing proceeds to creditors
  • Where grounds exist, object to a bankruptcy discharge

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Chapter 13 Bankruptcy Trustee

Chapter 13 bankruptcy reorganization bankruptcy debtors retain possession of their property throughout the bankruptcy process, unlike Chapter 7 liquidation bankruptcy where they must sell or gather property. These cases are primarily handled by trustees who handle payments and other duties.

  • Examining the proposed repayment plan of the debtor
  • As necessary, make objections
  • Receiving/collecting payments from the debtor in accordance with the agreed repayment plan

Distribution of payments to creditors

The trustee is a key role in most consumer bankruptcies. The bankruptcy trustee plays a key role in the process of bankruptcy. This includes reviewing creditors’ claims and challenging debtors’ claims.

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Are Bankruptcy Trustees Federal Employees?

To administer the bankruptcy estate, the trustee of the United States is an employee of Department of Justice. Private trustees, who manage bankruptcy cases under different chapters, are not government employees.

You may not be ready to file for bankruptcy yet, but you know you’re on the right track. Talk to a local bankruptcy attorney to save time, worry, money, and learn more about the process.

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