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The Role of the Bankruptcy Trustee

Another relatively unknown aspect of the bankruptcy process is the role and responsibilities of the bankruptcy trustee. The fundamental role of the bankruptcy trustee is to collect property and liquidate property belonging to the estate for which the trustee serves. The trustee collects payments and distributes them according to an approved Chapter 13 repayment plan. Additionally, the trustee is responsible for closing up the estate expeditiously and in a manner compatible with the best interests of parties involved. In many instances, the trustee assigned to a consumer bankruptcy case may have limited involvement. However, when complications arise, the bankruptcy trustee is essential to the administration of the case.

Administration of bankruptcy cases

Trustees must thoroughly investigate the financial affairs of individual filers. This includes examining proofs of claims and objecting to any improper claims. The trustee can oppose a discharge for the benefit of a general unsecured creditor. As the administrator, the trustee must supply information concerning the bankruptcy estate that a party of interest requests.

Trustee duties in Chapter 7

In Chapter 7 cases, the trustee may litigate issues that influence the veracity of the bankruptcy process. For example, the trustee may:

  • Object to discharge of a particular debt or an entire case on the basis that a discharge would amount to a "substantial abuse" of the bankruptcy system
  • Object to excessive attorney's fees
  • Initiate action against any unlawful practices committed by bankruptcy petition preparers
  • Sell and distribute the proceeds of assets or property to creditors

Chapter 13

Trustees appointed to Chapter 13 cases evaluate the debtor's financial affairs and provide recommendations to the court about the debtor's proposed repayment plan. This entails keeping an accurate account of all payments received and the amounts paid to each creditor.

Bankruptcy trustees act as custodians of good faith in the bankruptcy process and as such may help protect you. The trustee assigned to your case, however, does not represent your nor can the trustee give you legal advice. It is imperative that you retain the services of a qualified bankruptcy attorney. Contact the experienced attorneys at the Fishback Law Corp for more information. 

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