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What is the role of a bankruptcy trustee?

On Behalf of | May 22, 2020 | Firm News |

Almost every bankruptcy case involves a bankruptcy trustee. So if you are considering filing for bankruptcy to get out from under debt, you should familiarize yourself with the role a bankruptcy trustee plays in the process, as you will almost certainly deal with a trustee as you navigate your bankruptcy to its conclusion.

FindLaw explains that the duties of a bankruptcy trustee vary depending upon the kind of bankruptcy you file. So depending whether you file for Chapter 7 or Chapter 13, your bankruptcy trustee will handle your bankruptcy case in a certain fashion.

Chapter 7 duties

Under Chapter 7 bankruptcy, you liquidate your assets to pay off as much of your debt as possible so that you may make a fresh financial start. You will keep assets that the law allows you to exempt from bankruptcy while your trustee will sell off your nonexempt assets to create proceeds for your creditors.

Chapter 7 trustees do not blindly accept all claims from creditors. Your Chapter 7 trustee may file a challenge to a creditor claim if the trustee believes it is appropriate. A Chapter 7 trustee might also not accept a bankruptcy discharge from the court. The trustee may object if grounds exist for it.

Chapter 13 duties

Since Chapter 13 filers keep their property, a Chapter 13 trustee does not sell off your assets. The duties of a Chapter 13 trustee involve overseeing payments to your creditors. A Chapter 13 trustee will look at your repayment plan to see if it is feasible and proper. The trustee may object to the plan if necessary. Once the trustee approves the plan, the trustee will collect payments from you and distribute it to creditors according to the plan.

While the duties of bankruptcy trustees vary according to bankruptcy chapter, you can expect a trustee to do a lot of heavy lifting for you. They deal with creditors, take care of your payments, and overall make it possible for you to complete your bankruptcy so that you get back on your financial feet.