How The Bankruptcy Trustee Impacts Your Bankruptcy Case

When a debtor files Chapter 7 bankruptcy or Chapter 13 bankruptcy , a bankruptcy trustee is appointed to the case. The bankruptcy trustee is an independent contractor who works for the Office of the U.S. Trustee in the Department of Justice.

Below are a few of the responsibilities of bankruptcy trustees:

  1. The bankruptcy trustee is responsible for administering the bankruptcy case, reviewing the bankruptcy petition and all supporting documents to make sure the bankruptcy was filed properly and that the filing is in accordance with the bankruptcy code.
  2. The bankruptcy trustee is responsible for conducting an examination of the person(s) filing bankruptcy for the purpose of clarifying information relevant to the bankruptcy case. This usually takes place in the meeting of the creditors, where the bankruptcy trustee questions the debtor(s) about the case.  The bankruptcy trustee may also ask for further documentation.
  3. In the case of a Chapter 7 bankruptcy, the bankruptcy trustee is responsible for identifying and liquidating all non-exempt property for the purposes of repaying the creditors. The bankruptcy trustee will also help to resolve any disputes about the value of property.
  4. The bankruptcy trustee is responsible for making sure that no creditors are giving preference over others.  For example, a bankruptcy trustee would prohibit a debtor from paying back a loan from a friend or family member while failing to pay a credit card.  That would be considered a preference, so the bankruptcy trustee would not allow it.
  5. The bankruptcy trustee is also responsible for identifying and recovering any illegal transfers of assets that occurred before the bankruptcy filing.  For example, a bankruptcy trustee would recover cash or a home that was transferred into a friend’s name right before the debtor filed bankruptcy.