16 Jan Is the Bankruptcy Trustee Mean?
Chapter 7 bankruptcy trustees have a dirty job in consumer cases. Sometimes they have to be harsh to do it right. But if you’re playing by the rules, they hope it will be as painless as possible.
Trustees don’t exist to make you feel bad for having to file bankruptcy. That’s the first most important thing to realize. Many of them represent people filing bankruptcy. Every day they meet people in your position, people who need help and did nothing wrong. Most debtors regret having to file and trustees hope to make the process as painless as possible.
The trustee’s job is to make sure creditors get paid what they are entitled to and that you are doing what you are supposed to do. In the typical Chapter 7 case, they get paid only $60 from the debtor’s filing fee — and nothing if the debtor qualified to file for free. They don’t get paid anything more unless they collect money for the creditors.
So the trustee has an incentive to dig to find out if there are assets which are unprotected from creditors or which can be recovered to benefit them. But they assume when you file a bankruptcy that you are accepting the deal that’s part of Chapter 7 — you give up any assets which the law doesn’t protect freely in return for the fresh start. No one should be surprised going in about the deal.
But one of the little-understood factors that weighs on a trustee’s mind is the downside of the job. If he fails to defend creditor interests, they can sue him. The trustee has to be tough with people who won’t cooperate. If you go into a case knowing you’ll lose your car, for example, and then change your mind, he has to do what’s best for the creditors. It’s not because he is unsympathetic — he probably is. But he has no choice if it would pay a meaningful amount to creditors. And of course he must answer to the court and, in most districts, the Justice Department as well.
So a trustee has “skin” in the game just like you. But if you’re playing by the rules, he has no reason to be a bad guy at all. Hiring a good lawyer to lead you through the thicket will help you know what to expect.
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