Who is a bankruptcy trustee?

A bankruptcy trustee is an official appointed by the court to oversee and administer both Chapter 7 and Chapter 13 bankruptcy cases. The roles and responsibilities of the appointed trustee will vary, depending on the type of case. Below we will discuss the role of the bankruptcy trustee in both Chapter 7 and Chapter 13 cases.

Trustee duties for Chapter 7 bankruptcy

All bankruptcy filers must submit a bankruptcy petition and supporting schedules to the court which outline their financial and personal data. Schedules will include information about your income, debts, property owned, creditors and leases. Supporting information must also be submitted including your annual tax returns and payroll information. The bankruptcy trustee assigned to your Chapter 7 bankruptcy has the responsibility to verify all of the information and ensure it is accurate.

After the documentation is validated, the trustee will attend a meeting called the 341 Meeting or Meeting of the Creditors. Prior to the meeting the trustee must review each creditor’s claims, called a "proof of claim," which must be submitted to the court within 90 days of the meeting of creditors. The proof of claim outlines the amount of debt owed with supporting documentation. All claims must be reviewed by the trustee and objected to if they are deemed incorrect or do not have supporting documentation (this is done for both Chapter 7 and Chapter 13 bankruptcy).

You and the trustee are required to attend the 341 Meeting. Creditors may also attend, although it is uncommon for them to attend Chapter 7 meetings. At the meeting the trustee will review the information with you to validate its authenticity.

Finally, the bankruptcy trustee will be required to liquidate your nonexempt assets and use the proceeds from the sale to repay your creditors. If there are no assets to liquidate the trustee will prepare a report stating there will be no distribution to creditors. The trustee must also verify you have not made any preferential transfers or improperly executed security interests. If this has occurred the trustee has the legal right to get the money or property back to distribute to the creditors.

Trustee duties for Chapter 13 bankruptcy

Chapter 13 bankruptcy does not allow for an immediate discharge of debts but allows the debtor to create a 3 or 5 year repayment plan. In Chapter 13 the bankruptcy trustee will be responsible for reviewing all of the bankruptcy documents, including the schedules and petitions. They will also review your proposed repayment plan which includes verifying the calculations are accurate, your expenses are reasonable and all creditors are repaid according to current bankruptcy law.

Chapter 13 bankruptcy trustees will also attend the 341 Creditor Meeting and verify your bankruptcy petitions and schedules to ensure their accuracy. Finally, one of the most important responsibilities of the trustee is to ensure the repayment plan is approved by the court and you are sending monthly payments to the bankruptcy trustee according to your proposed Chapter 13 bankruptcy repayment plan. The trustee’s responsibility will continue for the duration of the plan, which is 3 or 5 years. The trustee must keep an accounting of all payments received and how much has been paid to each creditor.