Bankruptcy Basics: What Does The Chapter 13 Trustee Do?

20 Aug Bankruptcy Basics: What Does The Chapter 13 Trustee Do?

When a person files for bankruptcy, an estate is automatically created–just as if the person had died. The Bankruptcy Court appoints a trustee to administer the estate (similar to the way a probate court appoints an executor to administer the estate of a deceased person). The Trustee’s job responsibilities are very similiar to those of an executor. In a Chapter 13 case, the Chapter 13 Trustee’s job is to administer claims. Claims are statements regarding the debt that the creditors file with the Court. Claims are supposed to be the amount of the debts owed by the person who filed bankruptcy. The person who filed bankruptcy is known now as a Debtor. The Chapter 13 Trustee looks at the claims and pays the claims each month from money that the Debtor pays to the Trustee. The amount of money paid by the Debtor each month is determined by the Debtor’s Plan. The Debtor files a Plan at the beginning of the Chapter 13 case — a Plan of Reorganization.

The Trustee meets with the Debtor and the attorney at the 341(a) Meeting, also known as the Meeting of Creditors. The Trustee questions the Debtor to make sure that the information on the Petition and Schedules is accurate.

The Trustee also appears at the Confirmation Hearing, where the Debtor’s attorney and the Trustee inform the Court of the Plan, any changes in the Plan since the time the case was filed and the Trustee reports to the Court whether he/she approves of the plan or disapproves of the Plan. Once the Plan is confirmed, it becomes an Order.

Once that Plan has been approved (or confirmed) by the Court, the Court orders that the reorganization happen as the Debtor proposed (unless the Debtor later requests that the Plan be modified). The Chapter 13 Trustee obeys the order of the Court and it is his/her job to make sure the Plan effectively organizes the financial affairs of the Debtor, that the Creditors get paid in the way the Plan contemplated, and that the Order of the Court is fulfilled. At the end of the case, the Chapter 13 Trustee files a report with the Court and recommends that a discharge of any remaining debt be entered.

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I'm a consumer protection lawyer in Oregon, working with people in Klamath; Lake; Jackson; Josephine; Curry; and Deschutes County. I speak regularly on bankruptcy and consumer protection issues nationwide.
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