If you have been researching the possibility of filing bankruptcy, you have no doubt heard the term “bankruptcy trustee.” The bankruptcy trustee is a significant player and will be in charge of making important decisions about your filing. The trustee’s responsibility is to manage the bankruptcy process and distribute the individual’s assets and property.

Bankruptcy Trustee Definition and Roles

In general, a trustee is defined as an individual with administrative control of property and assets in trust. The trustee has a fiduciary duty to impartially administer these assets for a person or business. A bankruptcy trustee is one who oversees a bankruptcy case.

Bankruptcy cases are handled through special courts, under the jurisdiction of the federal court system and the Department of Justice. The DOJ’s U.S. Trustee Program chooses bankruptcy trustees. These trustees are private individuals with business acumen, accounting knowledge, or management skills related to bankruptcy.

Bankruptcy trustees are considered the “watchdog over the bankruptcy process.”

When a bankruptcy case is filed, the Trustee Program chooses a trustee to administer the case. The designated trustee monitors the parties’ actions to the bankruptcy to ensure the process is compliant with applicable laws and the negotiated bankruptcy plan.

The trustee is compensated for their services in administering the bankruptcy, along with reasonable expenses.

Bankruptcy Trustees by Type of Filing

Chapter 7 is a liquidation bankruptcy option for individuals or businesses. The goal of Chapter 7 is to discharge certain debts to give a fresh start to the debtor. In these cases, the trustee, known as a panel trustee, takes control of non-exempt property and sells it in order to settle with creditors. The debtor is typically permitted to retain the exempt property, including personal items and possibly real estate.

Chapter 13 allows individuals who can prove steady income to retain their property and repay debts according to a three-to-five-year repayment plan. The court agrees to the plan and budget, and the trustee operates as a disbursing agent. The trustee will process payments and distribute them to creditors. The Chapter 13 process includes a meeting between the creditor and the debtor, which is arranged and moderated by the trustee. Chapter 13 trustees are known as “standing trustees” because they have a standing appointment to cases within a specific geographic region.

Step by Step

Here are the steps of the typical bankruptcy process as it relates to the bankruptcy trustee.

* A debtor files their petition, providing the court with information about their assets and liabilities, as well as income and expenses.

* The court assigns a trustee to the case. The trustee is provided with all information mentioned above.

* The trustee collects all assets and sells to reduce them to money

* The trustee investigates the financial affairs of the filing individual or business.

* He or she then evaluates the proofs of claims of creditors.

* Money is distributed to creditors by the trustee, according to the order specified by the courts.

* The trustee approves or opposes the discharge of specific debts.

* The trustee submits reports to relevant government agencies.

Important Facts to Understand

  • A bankruptcy trustee doesn’t represent the debtor; they work for the court.
  • The bankruptcy trustee is a navigator and guide throughout the process. The case will proceed more quickly if the trustee is provided with all the needed information promptly.

How To Begin?

Although you can represent yourself in a bankruptcy, you also have the option of hiring a bankruptcy attorney.

If you are considering a bankruptcy case but are unsure as to which type of bankruptcy you should file, call Richard V. Ellis Law in Sarasota. He and his team are bankruptcy experts who can answer any questions you may have and get you started on the road to debt relief.