The idea of a bankruptcy trustee is alien to most people, having never become involved in a bankruptcy. Even those who have filed for bankruptcy personally are often unaware of the full rights and responsibilities of a trustee. What is a trustee? Who appoints him? What do they do? Is the trustee a judge? Is there a difference under the various bankruptcy chapters?
A Bankruptcy trustee is an individual in charge of administering an estate in bankruptcy. They are appointed by the United States Trustee and United States Department of Justice or by the creditors in a specific case, usually off of a list that includes bankruptcy attorneys.
In Chapter 7, the bankruptcy trustee gathers the debtor’s non-exempt property of the estate, manages the sales of this property and the proceeds of such sales, and distributes the proceeds. Additionally, the Chapter 7 trustee attends creditor meetings, determine what assets may be exempt, and even cancel certain creditors’ rights if he finds them to be fraudulent. In Chapter 13, the trustee’s duties are more extensive. He must receive the debtor’s monthly payments, distribute the funds to the debtor’s creditors, and maintain vigilance over the plan for years.
The bankruptcy trustee is in the position of making sure that the interests of the creditors are maintained in accordance with the laws of the Bankruptcy Code. In different jurisdictions, such trustees have established differing practices regarding the types of debts and payments they avoid and other procedures of the court. Because of this, it is important to speak to a qualified bankruptcy attorney, who is capable of guiding your case with the specific knowledge of individual trustees in your jurisdiction. Before making any decisions in relation to filing bankruptcy please contact a competent bankruptcy attorney.