Upon filing for chapter 13 bankruptcy, the court assigns the debtor a trustee. The trustee is an employee of the court and is one of the several key players in the chapter 13 bankruptcy process.
The United States Department of Justice is the department for which the trustee’s office belongs. The trustee is one of the most active persons involved in a chapter 13 bankruptcy case, second only to the client's lawyer. Understanding the duties and responsibilities of the court appointed trustee is important. All transactions are first approved by the trustee during the bankruptcy. As a representative of the court, only the judge can override the decisions made by the trustee. Other key responsibilities of the trustee consist of creditor notification, asset disposition, document preparation and control and limited consultation.
A trustee ensures all the proper paperwork associated with the filing are in order and complete. This is an important step in that if not all the appropriate documents and filings are accurate, which delays the case until a later date. This will drag the process out longer than is necessary, and will create additional work for everyone involved.
Notifying all affected creditors of the pending bankruptcy is another important task of the court appointed trustee. Once notification is complete; creditors are no longer allowed to contact the debtor, except in court. At this point, creditors have the opportunity to validate the information provided by the debtor to the court. If there are questions or objections to the filing by the creditors, they will be addressed to the court.
The property involved in a chapter 13 bankruptcy is classified in one of two ways. Some items will be exempt from the bankruptcy process, and others will be classified as nonexempt. Nonexempt items are turned over to the trustee for equal disbursement to the creditors.
All meetings with the creditors during the bankruptcy process will take place in the presence of the trustee. While the trustee does not serve as a lawyer to the person filing bankruptcy, the position does dictate that the individual in this capacity act in a fair, and professional, manner. In addition, it is the trustee’s job to look after the interests of both parties fairly.
As part of the chapter 13 process, all debts are consolidated into a loan of sorts. This gives the debtor an opportunity to pay off the debts over three to five years. In any case, the total of payments is greatly reduced than what they were before the bankruptcy. The payment plan established is administered and constantly monitored by the trustee throughout the process. The payment plan arrangement is a proposal submitted to the court for its consideration. The judge, along with recommendations by the trustee, determines if the payment plan is fair for all creditors equally. Usually, if the creditors will receive as much, or more, then under a chapter 7 filing, the court will agree.
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If you live in Alabama, Florida, Missouri, New York or Wyoming, please click here for additional information.
By an Act of Congress and the President of the United States, we are a federal Debt Relief Agency. Attorneys and/or law firms promoted through this Web site are also federally designated Debt Relief Agencies. They help people file for relief under the U.S. Bankruptcy Code. Disclosures Required Under the U.S. Bankruptcy Code.