What is the Role of a Bankruptcy Trustee?

If you file for personal bankruptcy, a trustee will be appointed to manage your case. The specific duties of a trustee depend on whether you file for Chapter 7 or 13 bankruptcy protection.

Chapter 7

In this form of bankruptcy, the trustee reviews the bankruptcy petition in order to verify that all of the required documentation has been submitted and the information is accurate. The trustee is also responsible for conducting a meeting of creditors (a “341 Hearing”) at which you will be asked a series of questions under oath. While creditors can appear at the meeting, in most cases they do not attend. The purpose of the meeting is verify the financial information and determine which debts should be discharged. Lastly, the trustee will assess and liquidate any nonexempt assets to satisfy outstanding debt.

Chapter 13

In a Chapter 13 bankruptcy, the trustee also reviews the petition and financial information. However, you also must submit a payment plan based on you income, expenses and debt. The trustee will determine if the plan is both feasible for you and ensures that the creditors will be satisfied.
As with a Chapter 7 filing, the trustee will also hold a 341 Hearing about a month after your filing. During the meeting you will testify under oath that the submitted information is accurate. The creditors will then file a proof of claim which the trustee must also review and approve. The trustee will finalize the repayment plan and begin making payments to creditors. During the payment plan, you must make a monthly payment to the trustee who then distributes funds to the creditors.

The Takeaway

It is important to remember that the trustee does not represent you. Instead, the role of a trustee is to act as an objective third party to ensure that your debts are satisfied fairly. At the same time, navigating the bankruptcy process is complicated and it is crucial to have proper legal representation. For this reason, it is essential to engage the services of an experienced bankruptcy attorney who can protect your interests.