20 Mar What Is A Bankruptcy Trustee?
The decision to file for bankruptcy is a difficult one to make, and once you have filed you must play by the rules. Filing for bankruptcy is complex, but when you are overwhelmed by debt you can not repay, it may be the best option for you.
When a bankruptcy case is filed, a Trustee is appointed to oversee it. Their job is to collect funds from the bankrupt debtor to pay creditors as required under the bankruptcy laws, and to distribute those funds to pay claims for debts owed.
There are different kinds (Chapters) of bankruptcy, and the trustees perform different roles depending on which Chapter is filed.
In Chapter 13 bankruptcy, the Trustee reviews the plan of repayment proposed by the debtor to make sure that the plan payments are what is required by the bankruptcy laws. While Chapter 13 is a repayment plan, it is not necessarily payment in full. There are rules and guidelines that set what is required to be paid back, and someone needs to make sure that the plan follows those rules. Additionally, he/she collects monthly payments from the bankruptcy debtor and distributes the funds collected to the creditors. His office acts as a clearing house for payments, and also will file motions if the debtor falls behind or adjustments are needed.
In Chapter 7, the Trustee will collect any non-exempt assets from the Debtor, sell (liquidate) the assets, and distribute the funds to the creditors. This bankruptcy trustee may also file motions against the debtor or other parties to recover funds, property or even object to discharge or request that the bankruptcy case be dismissed in circumstances where there have been improprieties.
Regardless of which chapter is filed, the primary focus is to look after the interests of the creditors and see that they are paid what they are entitled to be paid under the law.
While they are not the enemy of the debtors, they will proceed against a debtor who does not follow the law. In a way, they are the eyes and ears of the court system, and it is the job of the Trustee to bring certain issues to the Judge to decide.
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