A bankruptcy trustee is assigned to every Chapter 7 and Chapter 13 bankruptcy case. A trustee has a significant impact on a debtor’s case, but the exact role that a trustee plays in a bankruptcy proceeding is often uncertain. The Justice Department appoints a trustee for each bankruptcy who will often be a lawyer with significant experience in handling bankruptcy.
Chapter 7 and Chapter 13 Bankruptcy
The role of a trustee changes on the type of bankruptcy involved.
- Chapter 7 Bankruptcy. In these types of bankruptcy filings, the trustee administers the bankruptcy estate and distributes any non-exempt property to creditors. The trustee is paid through a percentage of any funds that are given to creditors. As a result, in situations where the debtor has no non-exempt assets, the trustee is paid a small amount.
- Chapter 13 Bankruptcy. The trustee in Chapter 13 bankruptcies is tasked with reviewing and following the Chapter 13 payment plan and distributing any payments made by an individual to creditors. A Chapter 13 trustee collects a percentage of funds paid through the payment plan.
The Role of Trustees in a Bankruptcy Case
A trustee often has several responsibilities in a bankruptcy. Some of the most common duties performed by trustees include the following:
- Reviews a Case. An individual must file a petition with the appropriate bankruptcy court. These petitions include details about the status of a person’s finances and the basis for a bankruptcy claim. One the petition is filed, a trustee will review the paperwork to make sure that the petition accurately depicts a person’s financial status.
- Manages Property. Once a person file for bankruptcy protection, the person’s property falls under the jurisdiction of the bankruptcy court. It is the trustee’s responsibility to manage this property to make sure that assets are protected.
- Conduct Meeting of Creditors. A trustee must conduct a hearing called a “341 meeting” in which the debtor is asked questions under oath. Debtors during this interview will be asked a variety of questions including what type of property the debtor owns, how much income the debtor makes, and other relevant information.
- Evaluate Creditor Claims. Creditors must submit proof that a debtor owes money. A trustee will evaluate these claims and raise any objections if there is not sufficient proof to believe that the debtor owes money.
- Liquidate Non-Exempt Assets. Chapter 7 allows individuals who are in financial trouble to stop any further actions that a creditor might take. In return for this release, a bankruptcy court takes control of a person’s assets. In these cases, a trustee must determine the value of these assets so that creditors can be compensated.
- Review and Administer a Repayment Plan. Chapter 13 bankruptcy involves a payment plan that dictates how an individual will repay their debts. In these cases, a trustee is tasked with deciding the terms of a repayment plan.
Contact an Experienced Bankruptcy Attorney
If you are interested in filing for bankruptcy in the state of Oklahoma and have questions about the process, contact attorney Jim A. Lyon to discuss the unique issues in your case and determine the best way to navigate bankruptcy issues.