What Are the Duties of the Trustee in Bankruptcy?

by Eugene Melchionne, Esq.

July 26, 2010

When you file a Chapter 7 or Chapter 13 bankruptcy case, a Trustee is appointed to administer your case.  This person is an independent contractor who works for the Office of the U.S. Trustee in the Department of Justice. Although they are commonly attorneys, there is no requirement that you be admitted to practice law to do the job.

Administering a case means reviewing the bankruptcy petition and all supporting paperwork filed with the Bankruptcy Court to see that it is properly completed according to the Bankruptcy Code requirements.

Then the Trustee must conduct an examination of the persons filing bankruptcy to determine background information relevant to the case.  The examination will also include production of paperwork documenting the information included on the bankruptcy petition.

In a  Chapter 7 case, the goal is to discover non-exempt assets (items you are mot allowed to keep).  The Trustee will recover that property either from the person filing bankruptcy  or from others who are holding those items.  Then, that property is sold and the money is used pay the creditors who file a claim with the Court.  The Bankruptcy Trustee gets paid the sum of $60 for every case assigned as well as a percentage of any property that is recovered in the case.

In a Chapter 13 case, the goal is determine the maximum amount that you can pay each month in a payment plan to your creditors.  Your income and expenses are carefully reviewed so that a proposed plan is realistic and fair.  There, the compensation is a percentage of your monthly payment up to a maximum of 10% of each payment.

In the states of Alabama and North Carolina, the persons reviewing each petition are called Bankruptcy Administrators, but their function is exactly the same.  Although the process of dealing with the Trustee can be intimidating, there is nothing to fear as long as you are honest and complete in disclosing your finances.

“ConnecticutGene Melchionne is a bankruptcy lawyer covering the entire State of Connecticut. He can often be found on Google+ and Twitter, where he shares information about consumer protection issues and personal finance.

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Last modified: November 19, 2013