Are you considering bankruptcy? Are you researching the bankruptcy process? If so, you may be wondering what a trustee does in a bankruptcy.
So, what is a Trustee?
A trustee is appointed by the court to administer your case. Basically, the trustee reviews your bankruptcy petition to look for problems or fraud. So, what does a trustee do? The trustee looks to maximize the amount paid to your unsecured creditors. What a trustee will do in your bankruptcy depend on the chapter under which you file. For the purposes of this post, we will focus on a Chapter 7 bankruptcy.
Chapter 7: The Trustee’s Role
Reviews Bankruptcy petition:
The trustee will go over your bankruptcy petition and any other required paperwork submitted. The paperwork you submit will focus on your debts, income, and property. This information gives the trustee a better idea of your financial affairs.
Handles the Meeting of Creditors:
As part of the bankruptcy process, you and your attorney will attend a Meeting of the Creditors. The trustee will ask you questions under oath about the information included in your bankruptcy plan and documents. Also, your creditors may also show up to ask questions. However, this is not guaranteed.
Sells Assets:
Any non-exempt property will be sold by the trustee to repay your creditors. The property qualifies as exempt will depend on your state’s statutes. So, it is important to discuss your assets with your attorney prior to filing. If the debtor (you) and the trustee cannot come to an agreement on what property should be exempt, a judge will decide for you.
Avoids Preferential Treatment:
The trustee ensures that no one receives preferential repayment. Meaning, all unsecured creditors will be treated the same. For example, if you repay more to a family member or a friend rather than repaying others. The trustee can undo any of these payments to redistribute the money evenly amongst your creditors.
For more information on the U.S. Trustee Program, click here.