A bankruptcy trustee is an administrator who is tasked with handling your bankruptcy estate and its affairs. The specific roles and duties this person has can depend on the type of bankruptcy you filed for, but a key thing to grasp upfront is that the bankruptcy trustee is a neutral party between the bankruptcy filer and their creditors.
What Does a Bankruptcy Trustee Do?
A bankruptcy trustee oversees bankruptcy proceedings. Their primary duties include collecting, managing, and distributing assets from bankrupt estates; administering payments to creditors; investigating claims made by creditors; reviewing documents related to the bankruptcy case; and advising on any relevant legal matters.
Because the trustee is a neutral third party, you shouldn’t regard them as being on your side or your creditors’ side. Rather, they are there to facilitate the bankruptcy process for the court and will hold all relevant parties accountable for their responsibilities and duties while the bankruptcy case remains open.
Chapter 7 Bankruptcy Trustees
As previously mentioned, the specifics of a bankruptcy trustee’s role and duties can change depending on the type of bankruptcy case they’re handling. In Chapter 7, a trustee is tasked with additional duties involved with inventorying the bankruptcy estate, appraising its value, liquidating (selling) assets, and distributing sale proceeds to creditors.
Chapter 11 Bankruptcy Trustees
Chapter 11 doesn’t always involve a trustee, but when a court assigns one to a company’s case, the trustee deals with the reorganization of a business’s debts, assets, and even its operations. They inventory and manage the bankruptcy estate and often act as a go-between for debtors and creditors trying to work out a reorganization plan.
Chapter 13 Bankruptcy
Someone who files for Chapter 13 isn’t typically seeking a debt discharge; rather, they wish to resolve their debt by restructuring it into an installment plan. The bankruptcy trustee’s role, in this case, is to facilitate the negotiations for the restructure plan. Once such a plan is in place, the trustee is then tasked with receiving payments from the bankruptcy filer for the duration of the plan and distributing proceeds to the creditors. If the Chapter 13 debtor fails to keep up with their plan, it’s also incumbent upon the trustee to initiate legal action to terminate the repayment plan.
If you wish to learn more about the bankruptcy process and how bankruptcy can help you achieve the debt relief you need, contact Buchalter & Pelphrey Attorneys At Law now.