Who Is Your Bankruptcy Trustee?

Whether you file Chapter 7 or 13 bankruptcy, you will need to be prepared to meet with a court-appointed bankruptcy trustee whose job is to ensure the veracity of disclosures contained within bankruptcy filings, verify income, assets, and that your creditors receive fair treatment in your case. Depending on which chapter you file, some aspects of a trustee’s role and tasks will differ while others will remain consistent.

The Bankruptcy Estate, a Short Introduction:

When discussing a trustee’s role in your case, a phrase that will frequently arise is the “bankruptcy estate.” In essence, the bankruptcy estate represents all of a filer’s legal or equitable interests in property at the time of filing one’s case. Your home, your car, your bank accounts, and all other property you own becomes part of your bankruptcy estate.

Chapter 7

In Chapter 7, which is also known as a “liquidation bankruptcy,” the trustee’s main task is to make sure that any non-exempt property that can be sold for the benefit of creditors is retrieved from the debtor, sold, and the proceeds disbursed to creditors.

Chapter 13

Chapter 13, which is also called a “reorganization bankruptcy”, is designed to pay off as much debt one can reasonably afford over a five year period. In these cases, the trustee’s job is to review the filer’s proposed plan to ensure that creditors are getting as much as they should and to object to the confirmation of plans that do not meet the requirements of the bankruptcy code. For the five years they oversee a case, the trustee receives and disburses payments to your creditors pursuant to the confirmed plan.

However, like Chapter 7 trustees, Chapter 13 trustees can look at a filer’s assets and decide that if their proposed plan does not pay as much as the court would receive if they were to liquidate a filer’s non-exempt assets, they can either seek to convert the case to Chapter 7 or require an increase the plan payment to make up the difference between the original proposed plan payment and the amount that would pay to creditors in the event of a liquidation of assets.

Still have questions about how a trustee might treat your case? Please feel free to reach out to your Modesto bankruptcy attorney at (707) 385-0422.