When filing for bankruptcy, it is vital to know how the process works. Aside from the creditor and borrower who is filing bankruptcy, the trustee also plays an important role in the bankruptcy process.
What is a trustee? A trustee is appointed by the United States Trustee Committee to represent the creditor. A trustee’s job is to ensure that the procedures are done accordingly and that the borrower gets through the bankruptcy process as smoothly as possible.
In every bankruptcy case, a trustee may perform different functions. For instance, a trustee can collect the debtor’s properties, or oversee the liquidation of the assets and distribute the proceeds to each creditor involved. A trustee also has the power to object a debtor’s claim for the exemption of his debts.
Let’s discuss the trustee’s role in each of these three types of bankruptcy:
Chapter 7 Bankruptcy
In a Chapter 7 Bankruptcy, a debtor usually does not have any assets or properties qualified for liquidation. If there are assets for liquidation, the trustee shall be the one to supervise this procedure. During the entire bankruptcy process, the trustee must see to it that the debtor is properly cooperating with the policies given by the bankruptcy court. If the debtor commits fraud or acts of perjury, a trustee can refuse to discharge a debtor from his bankruptcy claims.
Chapter 13 Bankruptcy
More tasks are involved with Chapter 13 Bankruptcy. In this case, the debtor will be under a repayment plan created by the bankruptcy court. It is the trustee’s responsibility to ensure that the debtor will be able to keep up with the repayment plan as arranged. As the trustee, he must see to it that the receipts are properly issued and that the payments submitted by the debtor are given to the right creditors on time. The trustee must also be present in the court during sessions especially when property valuations are being discussed.
Chapter 11 Bankruptcy
In a Chapter 11 Bankruptcy, the trustee appoints an official committee and designates its members as well. This committee will be in charge of keeping financial records, investigating in case acts of fraud or abuse are suspected, making sure that all schedules are met and other important steps involved in the bankruptcy process.
Although the trustee represents the creditor, he must also do his best to help the debtor get through the whole bankruptcy process without problems or complications. Therefore, a trustee should help you in filing the documents needed and speed up the process. The trustee would be the one to communicate with your creditors regarding your case. In addition, it is also the trustee’s role to assist the debtor, providing the necessary advice with regards to financial management.
As the debtor, it would be for your own good interest if you would cooperate with your designated trustee. When completing applications or signing document forms, see to it that all information you provide are true and accurate. Bear in mind that the trustee has the power to discharge your claims if you try to commit any illegal actions against your creditors.