What Is the Role of a Bankruptcy Trustee?

A bankruptcy trustee is a very important person in the process of filing for and administering bankruptcy. Many people may be unclear on the exact nature of the trustee’s role.

Who is the trustee? What do they do, and who appoints them?

Who is the Trustee?

A bankruptcy trustee is appointed by the U.S. Department of Justice via the U.S. Trustee program.

The trustee is not a federal employee. Rather, they work under the direction of the court to help ensure that the debtor’s bankruptcy claim is handled properly.

What Does a Bankruptcy Trustee Do?

The bankruptcy trustee administrates much of the bankruptcy proceedings. Trustees in bankruptcy cases oversee the debtor’s estate once the process is underway. They act as a facilitator on behalf of the estate, ensuring that all debts are collected legally and on schedule.

A trustee differs from a bankruptcy lawyer in a few ways. First, a lawyer is an attorney hired by the debtor to assist in preparing and filing for bankruptcy. The trustee is appointed by the court and acts on behalf of the debtor’s estate only after bankruptcy is declared.

Likewise, a trustee is not a bankruptcy judge. The role of the judge in a bankruptcy case is to oversee all decisions regarding the case. The judge decides on issues such as eligibility and any potential discharge of loans. The trustee then works to ensure that the judge’s rulings are faithfully upheld.

If the exact duties of a trustee in bankruptcy proceedings seem unclear, that’s because those duties vary. The trustee has different responsibilities depending on the bankruptcy chapter being filed.

Chapter 7 Trustee Bankruptcy Duties

In Chapter 7 bankruptcy, all non-exempt items of the debtor’s estate are liquidated. The proceeds of the liquidation are then put toward the payment of remaining debts to the debtor’s creditors.

For the trustee, Chapter 7 bankruptcy is largely about handling this liquidation process. Principally, the trustee catalogs the debtor’s non-exempt property and oversees the liquidation process and payments to creditors. The trustee is responsible for making sure that all property is sold for proper value. Likewise, they ensure that creditors receive the proper amount.

If necessary, the Chapter 7 trustee can also petition on the estate’s behalf against a creditor. A trustee may also make challenges regarding loan discharges or other such rulings during the bankruptcy proceedings.

Ultimately, the trustee’s role in Chapter 7 is to ensure that all debts are collected in the right amount.

Chapter 13 Trustee Bankruptcy Duties

Chapter 13 bankruptcy involves a rearrangement of a debtor’s finances, rather than liquidation of assets. In this process, the debtor is provided with a rigidly structured financial plan through which to pay back creditors. Some loans may be discharged in this process, and the debtor is not required to forfeit any assets.

Like in Chapter 7, a Chapter 13 trustee may challenge rulings with regards to creditors, discharges, or anything else. But as Chapter 13 does not involve liquidation, the trustee has no assets to oversee.

Instead, a trustee in Chapter 13 works to ensure that the debtor’s payments are made according to their repayment plan. The trustee first reviews the proposed repayment plan to ensure that it is sufficient. Then, they oversee the collection and payment of payments to the creditors in the case.


Bankruptcy Trustee


Why Is a Trustee Needed?

The reason for a trustee is fairly simple. They are a neutral party who ensures that both the debtor and their creditors are fairly compensated. Bankruptcy is an enormous financial process.

In such processes, it is essential to make sure that all parties receive fair treatment according to the law. The trustee can be thought of as a guardian of the bankruptcy process.

Bankruptcy is a serious and complicated process. The role of the trustee is extremely important to overseeing the ruling of the court. But before a bankruptcy filing reaches that point, it is also essential to hire a bankruptcy attorney.

A bankruptcy lawyer can help during the preparation period and can help you to secure the fairest possible ruling in court.

If you are considering filing for bankruptcy, a crucial first step is to hire a bankruptcy lawyer. With an attorney on your side, your future financial security will be in much safer hands.

Discuss your options with one of our bankruptcy lawyers today! To discuss with an experienced attorney, call us at 801-285-0980.

Learn More

At Blue Bee Bankruptcy, our lawyers are highly experienced in the various filing options.

More importantly, we understand that each case we receive is unique. Each client has different needs and goals. We will discuss these signs with you and decide the best route to take.

We strive to help our clients rebuild their lives and take steps toward a better financial future through filing. 


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If you’re dealing with the potential of bankruptcy, give us a call. Our team will work to help you by reviewing all of the options our firm has available. We will ensure you’ll get the best possible outcome for your situation.

Get in touch today so we can start working on either halting bankruptcies or preventing them from taking place altogether!

Contact Us Today For Help! You can schedule your free consultation online or call us at (801) 285-098.


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