Bankruptcy Trustees are Only Human

A blogger who had filed a Chapter 13 recently blogged on a bankruptcy forum website asking questions about his bankruptcy trustee. He asked, “Surely a Trustee would not disregard a court order. Would he?” Most trustees will not disregard a bankruptcy court order, but nevertheless, bankruptcy trustees are only human.

It seems in this particular case the blogger filed a motion to modify his plan in order to keep much needed income tax refunds from this past year. The trustee filed objections to the motion but later withdrew the objections. Because the objections were withdrawn, the bankruptcy judge approved the motion to give the income tax refunds back to the filing debtor.

In the meantime, the debtor had already sent the refund to the trustee. Now, the debtor, two weeks later, has not received the refund, and is worried the trustee is disregarding the judge’s order, so he inquires in the bankruptcy forum thread about whether to make a Motion to Compel the bankruptcy trustee to comply with the order.

Stranger things have certainly happened in the bankruptcy process, but bankruptcy trustees are only human like the rest of us. They sometimes are slow, sometime forget, and sometimes they get downright ornery. Some may actually force the debtor to file a Motion to Comply just to give the debtor a bad time.

There is no doubt on the outcome of such a challenge. The trustee will have to comply with the judge’s order. Bankruptcy court judges are the ones ultimately responsible for running the business of the bankruptcy court. They make the ultimate decisions on any procedures or rules.

Usually, a trustee will be assigned to a Chapter 7 bankruptcy case from a panel of people, typically lawyers. He or she is charged with reviewing your assets and debts, and then selling available assets for distribution of the proceeds to pay your unsecured debts.

The panel trustee of a Chapter 7 works under the direct supervision of the U.S. Trustee which is assigned to work a particular U.S. Bankruptcy District Court. The panel trustee does the every day or hands on work of liquidating assets and carrying out the orders of the court. He or she is usually the one that has the most physical contact with the filing debtor and his lawyer.

Since you are dealing with humans, you always run the risk of personality clashes when dealing with trustees. Remember, the job of the trustee is primarily to protect the interest of your creditors during the bankruptcy process.

A Chapter 13 trustee is usually a standing trustee appointed by the U.S. Trustee to handle Chapter 13 cases. They do not have to be lawyers, but they are normally trained and certified to perform their bankruptcy duties. They do similar duties that the panel trustee does, but their duties are more involved because of their involvement with the Chapter 13 plan.

The Chapter 13 trustee’s personality plays just as important role as the panel trustee’s in a Chapter 7. As a matter of fact, since the plan to pay back your creditors can be very complicated, there is much more intercommunication between the trustee who handles a Chapter 13 and the debtor and/or his or her lawyer.

Communication or the lack thereof is often what causes problems between a trustee and a debtor. Your bankruptcy lawyer, who should be familiar with a local bankruptcy’s use of trustees, should be a valuable asset in helping you go through a bankruptcy case more smoothly. They usually know the human behind the trustee.

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