During bankruptcy proceedings, all of your assets and debts are viewed as an estate. A bankruptcy trustee is an entity, usually an individual, who oversees your bankruptcy proceedings from beginning to end. The job of the trustee is not to work for or against you, or any of your creditors, but to work on behalf of the estate. The trustee has different responsibilities depending on whether you’re filing for a Chapter 13 or Chapter 7 bankruptcy.
Trustee Responsibilities for Chapter 13
Generally speaking, Chapter 13 filings are about retaining your assets and settling on an altered repayment plan in order to bring you back into good standing with your creditors. The responsibilities of the trustee in these cases include:
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Verifying Your Claims: You will be asked to submit a detailed description of your income and your assets, which will be verified by the trustee
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Reviewing Your Repayment Proposal: Part of your bankruptcy petition will include a proposed plan for repaying your creditors, which your attorney will help you with. The trustee will review this proposal, and advise you of any changes they wish to make, such as increasing your repayment amount. They are subject to a hearing with a judge if you can’t come to agreeable terms.
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Overseeing a Meeting of the Creditors: Once your case is filed, you are required to attend a hearing where your financial statements and repayment plan will be reviewed for the court and your creditors. This meeting will be overseen by the trustee, who will question you regarding these matters.
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Objecting to Improper Claims: Your various creditors will be allowed to file a “proof of claim,” which states the amount of money owed and provides documentation. The trustee will review these claims and weed out any that are improper or fraudulent.
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Administering Repayment: In chapter 13 bankruptcy, you will be directed to make one predetermined payment per month to the trustee, who then distributes it amongst your various creditors.
Trustee Responsibilities for Chapter 7
Chapter 7 filings are all about liquidating your assets, if you have any, in order to pay off your creditors as much as possible before discharging the remainder of your debt. The responsibilities of the trustee in these cases include:
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Reviewing Documents: The trustee will review all documents throughout your proceedings, including the bankruptcy petition.
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Conduct Examination Hearing: All of the information in your petition will be verbally verified in an examination hearing conducted by the trustee, along with further questioning by the trustee, the court, or your creditors.
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Level the Playing Field: The trustee will carefully examine your finances to be sure you haven’t transferred property or given preferential treatment to any creditors (such as family members) before filing for bankruptcy.
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Liquidating Assets: The trustee will seize any nonexempt assets from your estate, obtain the highest amount of capital possible from their liquidation, and distribute them evenly amongst your creditors. The trustee determines the value of your assets. If you have no assets, the trustee will notify the court there will be no repayment of creditors in your case.
Working with a trustee doesn’t need to be an intimidating experience. Remember, they’re not in place to fight against you. Their job is only to represent your estate fairly. That being said, it’s much easier to handle these proceedings with an attorney who is familiar with the individual trustees in your area, and their particular requirements.