When consumers file for bankruptcy, there are 2 people they may work closely with during the process: their bankruptcy attorney and their bankruptcy trustee. While your attorney is performing duties on your behalf, the trustee of your case is an independent party whose main goal is to ensure your case runs according to the bankruptcy law. No matter if you choose Chapter 7 or Chapter 13, a trustee will play a central role in your bankruptcy.
A Bankruptcy Trustee’s Role in a Bankruptcy
When you file for bankruptcy, the law requires the opening of a bankruptcy estate. This estate works differently for each plan, but it’s essentially the place where your funds will be housed. A bankruptcy estate is a separate legal entity, and as such, it needs to be maintained by someone. The court realizes this need, so it created a position for an independent bankruptcy trustee who is appointed to be in charge of your estate. This trustee is supervised by the U.S. Trustee. A bankruptcy trustee distributes your funds according to the bankruptcy plan you’re awarded.
A bankruptcy trustee does more than handle your payments and assets. After you have filed, the trustee will review your documents to ensure everything is legitimate and there are no issues with what you have filed. For example, if you claim a certain amount of income on your filing documents, the trustee will review your paystubs to double-check your accuracy.
The trustee will administer the meeting of the creditors. At the meeting of the creditors, your creditors are invited to discuss your plan but since they rarely attend the meeting, the trustee will likely be the one asking you questions and requesting that you provide additional documentation, if necessary.
Chapter 7 Bankruptcy
In a Chapter 7 bankruptcy, your assets are sold to pay off certain debts. The bankruptcy trustee is in charge of several aspects, including:
- Collecting and selling your assets;
- Holding and being accountable for all property that is to be sold;
- Reviewing your financial affairs;
- Opposing your bankruptcy discharge if applicable; and
- Objecting to any claims of the creditors that are deemed improper.
To see a full list of the trustee’s duties, go online to view the Bankruptcy Court regulations.
A bankruptcy trustee is paid an administrative fee for handling the meeting of the creditors and through commissions on your assets that are sold. The percentage the trustee receives depends on the amount garnered from the sale of your assets.
Chapter 13 Bankruptcy
Because a Chapter 13 bankruptcy involves creating a payment plan rather than selling off assets, the trustee’s responsibilities are slightly different. Your trustee will review your repayment plan and voice any concerns or objections he has. The trustee also collects your payments and disburses them to your creditors. To cover fees, a trustee is paid a percentage of your monthly payments.
Contact a Cleveland Bankruptcy Lawyer
The bankruptcy trustee’s main concern is making sure your case is accurate and free of any fraudulent activity. They make sure your paperwork is in order, your assets have all been identified, and your debts are legitimate. Because they are so thorough, you need to make sure you’ve covered everything, and the best way to cover your bases is to enlist the help of a seasoned bankruptcy attorney.
The attorneys at Luftman, Heck & Associates have handled numerous bankruptcy cases and are well prepared to help you file yours as well. Call today for a free consultation at (216) 586-6600, or contact us online.