What Does a Bankruptcy Trustee Do?

When it comes to bankruptcy, there is always a bankruptcy trustee involved no matter what type of bankruptcy it falls under. These trustees have different roles and obligations depending on the type of bankruptcy they are handling.

Role of the Bankruptcy Trustee

Trustees are people who are appointed or selected to oversee particular bankruptcy cases or a particular type of bankruptcy. Their duties vary depending on the type of bankruptcy they are assigned on. It also varies depending on the circumstances of the debtor and the creditors. So you can say that a bankruptcy trustee’s duties vary every case, though there may be similar cases but that is usually unlikely to happen.

* Chapter 7 Bankruptcy Case

Despite rarely doing the exact same procedures in different bankruptcy cases, the bankruptcy trustee has certain obligations which they do in all chapters. The only difference is that they still have a lot of obligations which they only perform in certain types of bankruptcy. In Chapter 7 liquidation bankruptcy, here are some of the things a bankruptcy trustee does:

1. Rounds up the debtor’s properties and assets.

2. Selling the debtor’s assets and properties.

3. Checking the claims of the creditors and challenging them.

4. Distributing the liquidation proceeds to the creditors.

5. Objecting to a bankruptcy discharge if they find a reason to do so.

* Chapter 13 Bankruptcy Case

The difference between the obligation of a bankruptcy trustee in Chapter 7 and in Chapter 13 is that the bankruptcy holds on to the property of the debtor during the entire bankruptcy process unlike in Chapter 7 where they are in charge of the rounding up and the selling of their assets. A trustee’s main duties in these cases deal primarily with handling payments of the plan the debtor and creditors agreed on. Here are some of the things the bankruptcy trustee does in Chapter 13:

1. Reviewing the proposed payment plan of the debtor which is based on their income.

2. Making objections, suggestions and possible changes to the plan if it is necessary of if the plan is unacceptable by the bankruptcy law or the bankruptcy court.

3. Receive or collect the payments of the debtors which were agreed on by both parties.

4. Distribution of the payments to the creditors.

5. Informing the debtor in case their bankruptcy petition has been dismissed due to the non-payment of plan payments.


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