Just What is a Bankruptcy Trustee?

When you file for Chapter 7 or Chapter 13 bankruptcy, a trustee will be appointed to your case. The trustee is typically a local attorney experienced in bankruptcy law. The function of the trustee is to represent the estate that is created when you file for bankruptcy. The trustee is not meant to be your ally or adversary, which can be confusing for many debtors. Rather, the function of the trustee is merely to collect money from available assets to pay creditors. The trustee will review the initial bankruptcy petition, conduct the meeting of creditors, and ensure there is nothing fraudulent about the bankruptcy filing.

The Function of a Chapter 7 Bankruptcy Trustee

In a Chapter 7 case, filers will meet the bankruptcy trustee for the first time at the meeting of creditors. At this meeting, the trustee will review whether any assets are exempt from the bankruptcy process. If the trustee finds that all of the debtor’s assets are exempts, that’s usually the end of the trustee’s role in the case. However, if there are nonexempt assets in the estate, the trustee will likely continue the meeting and ask for additional documentation.

The trustee may seize any nonexempt property to pay creditors, or abandon it, which leaves it in your possession. For example, while a car is typically nonexempt property, if there is still more on the car loan to be paid than it’s worth, the trustee will probably abandon the property, as re-selling it will produce little, if any, money for creditors. In Chapter 7 proceedings, the trustee receives a commission based on the amount of money that is brought in by selling nonexempt property to pay unsecured creditors.  

The Function of a Chapter 13 Bankruptcy Trustee

Bankruptcy trustees take a more active role in Chapter 13 cases. The trustee will review the proposed repayment plan and ensure that it is realistic. The trustee actually receives the payments and distributes them to creditors. In addition, the trustee will continue to monitor the debtor’s monthly income and tax filings to ensure they are complying with the requirements of the plan. If the debtor owes back child support, the trustee also provides some financial information to the state agency that monitors child support payments. In Chapter 13 cases, the trustee also receives a percentage of the payments that are distributed to creditors.  

As Chapter 13 bankruptcy is an ongoing process that takes several years to complete, the trustee also assists in making any necessary modifications to the repayment plan.

Thinking About Filing for Bankruptcy?

If you’re thinking about filing for bankruptcy, an experienced bankruptcy attorney can walk you through the process. The Law Offices of Melanie Tavare helps residents, in Anitoch, Hayward, and many communities throughout the area. We can assist you in reducing or eliminating debt through Chapter 7 or Chapter 13 bankruptcy. Contact the Law Offices of Melanie Tavare at 510-255-4636 or online.

The Law Offices of Melanie Tavare is a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.