What is a bankruptcy trustee?

During the course of your bankruptcy case, you will likely hear the term “trustee” used a lot. The word “trustee” refers to the person appointed to represent the collective interest of your creditors during your bankruptcy case.

When you file for bankruptcy, the filing automatically creates what is known as the “bankruptcy estate”. The bankruptcy estate, in general, includes almost all of your property. If there is not an exemption to cover your property, it will be considered nonexempt. (Not to worry! In reality most Chapter 7 cases are considered “no asset” cases because most people who file for Chapter 7 bankruptcy have enough exemptions to cover all of their assets) If assets are nonexempt, the bankruptcy trustee will take control of the property, sell, it and distribute the proceeds to you unsecured creditors. This is the main goal of the trustee in a Chapter 7 case.

In Chapter 13, there is also a trustee, but their role is slightly different. In Chapter 13 the trustee’s goal is not to liquidate or sell your nonexempt property. Rather, the trustee is there to investigate your financial affairs, examine and contest creditor claims, make recommendations for your plan, and ensure that the implemented plan is fair and feasible.

Will I ever have to interact with the trustee?

Yes. There is one point in the bankruptcy process where you will have to meet with the bankruptcy trustee. This is during the “meeting of creditors” that the bankruptcy code requires to be held. Here you must attend a meeting and submit to examination under oath. The meeting is designed to allow creditors to question you about your debts, income and assets. In reality however, creditors rarely attend these meetings; rather, the trustee will ask you some simple questions about the information contained in your bankruptcy filing. As long as you are honest, you have nothing to worry about.  The “meeting of creditors” is held regardless of whether you file in Chapter 13 or Chapter 7.

An Arizona bankruptcy attorney in Tucson can give you more detailed information about the role of the bankruptcy trustee and the meeting of creditors. A Tucson bankruptcy attorney can advise you on the meeting of creditors and ensure that it goes as smoothly as possible.

Stephen M. Trezza, Tucson Bankruptcy Attorney