What Does a Trustee Do in Bankruptcy?

A bankruptcy trustee helps administer the case while it proceeds through
the court process. The trustee is actually a part of a U.S. Trustee program
developed through the Bankruptcy Reform Act of 1978 under the Department
of Justice through the Attorney General. Depending on which chapter is
filed, the role of the trustee varies.

Chapter 7 bankruptcy, the trustee may liquidate assets the debt surrenders to satisfy creditors.
For most cases, the trustee may not have assets to liquidate if they are
considered exempt. When a debtor has no assets to liquidate, they ensure
the filing process is completed by reviewing related paperwork and petition
details. They also may conduct the meeting of the creditors before discharge
of debt is granted.

Chapter 13 bankruptcy, the trustee collects monthly payment from the debtor to disperse to creditors.
The trustee also conducts the meeting of creditors. For debtors in this
chapter, the trustee makes sure any remaining income left over from paying
necessary expenses (disposable income) is used in their Chapter 13 plan
to help pay down debt obligations.

Some states may not have a trustee or the bankruptcy attorney acts as the
trustee during the process. The trustee helps maintain fairness on both
sides of the case (between the debtor and creditor) according to the bankruptcy
code. It is also important to disclose pertinent details about your finances
to your trustee truthfully. You can learn how to protect assets legally
from creditors before you begin the filing process.