Recently on our legal forum a user asked, “I have filed Chapter 7 bankruptcy. They mentioned that a US bankruptcy trustee would be appointed to review and manage my case. I am wondering who this is and what exactly they will do?”
Who is the bankruptcy trustee?
The bankruptcy trustee is appointed by a division of the U.S. Department of Justice. Specifically, the U.S. Trustee’s Office. Although the bankruptcy trustee has many responsibilities which will be detailed below, their primary responsibility is to maintain the integrity of the bankruptcy system. This is done by ensuring that bankruptcy cases are processed efficiently and that they comply with the federal bankruptcy laws.
According to the US Department of Justice, the mission of the United States Trustee Program is to “promote the integrity and efficiency of the bankruptcy system for the benefit of all stakeholders – debtors, creditors, and the public.”
Administrative duties of the bankruptcy trustee
The U.S. bankruptcy trustee’s duties are primarily administrative and include the following tasks:
- Liquidation of all nonexempt assets for Chapter 7 bankruptcy cases. For example, if you file Chapter 7 bankruptcy the bankruptcy trustee will collect all of your nonexempt assets and liquidate them. Liquidation can include selling the assets to generate funds to repay creditors. Creditors are repaid in priority order as determined under federal bankruptcy laws.
- Reorganization of businesses under Chapter 11. Although this particular duty does not apply to your case, if you were filing Chapter 11 and reorganizing a business, the bankruptcy trustee would assist you with the reorganizational process.
- Oversee the reorganization under Chapter 13. Additionally, if you had decided to file Chapter 13 bankruptcy and reorganize and repay some of your debts the bankruptcy attorney would be appointed by the court to serve as the trustee of your estate. Overseeing a debtor’s plan includes ensuring that the debtor meets the repayment obligations as established by the Chapter 13 bankruptcy plan.
- Review professional fees.
- Ensure bankruptcy estates are administered promptly and efficiently.
- Review bankruptcy documents, such as disclosure statements.
- Advocate matters relating to the Bankruptcy Code and rules of procedure in court.
Legal obligations of the bankruptcy trustee
As mentioned above, the bankruptcy trustee is responsible for ensuring that the debtors follow the established bankruptcy laws and regulations. To that end the bankruptcy trustee has legal responsibilities which include the following:
- Determining whether the requirements of the bankruptcy code have been followed and investigating bankruptcy fraud and abuse.
- If necessary, referring bankruptcy cases for criminal investigation.
How Does a Trustee Affect Your Bankruptcy Case?
Like all professions there are good bankruptcy trustees and some who may not be so good. Getting a great bankruptcy trustee appointed to your case can ensure that the case moves smoothly through the process. What can you do to ensure you have a good trustee appointed to your case? There’s not much you can do. What is in your control, however, is making sure that you provide accurate information and fully cooperate with the requests of your trustee at every stage of the bankruptcy process.
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