If you are into deep financial trouble and are planning to file for bankruptcy, it is very important for you to be aware of the role of a bankruptcy trustee in this regard. For every case that is filed, the court appoints an impartial trustee. No matter whether you are filing under chapter 7 or chapter 13, you cannot ignore the role of the trustee. In every case, the trustee will represent the creditors. However, it does not mean that the trustee will act always in favor of creditors only. In fact, the main duty of the trustee is to make sure that everything is done as per the laws and as per the judgment of the court.
The Role Of The Trustee
The main duty of the trustee is to represent the creditors. However, this role changes, depending upon the different types of cases and the judgment given by the bankruptcy court. These legal professionals are usually the representatives of the creditors, but depending upon case to case, it is also their duty to keep a watch on the debtor’s action. For example, if it is a chapter-7 case, their duty is to make sure that all the assets and properties of the debaters have been liquidated as per the laws. At the same time, they also work in favor of the debtors, by making sure that they get the properties exceptions as per the specific laws of that particular state regarding the same. On the other hand, if it is a chapter-13 case, the bankruptcy trustee keeps a watch on the debtor’s business activity. In some cases, they even work hand in hand with the debtor in order to ensure smooth and profitable running of the business of the debtor. At the same time, they also keep a watch whether the debtor is religiously working on the repayment plan suggested by the court or not.
How Does The Trustee Work?
There are several ways a bankruptcy trustee carries out its work. However, whatever way they follow, their main objective is always to protect the interest of the creditors. For example, the trustee can distribute the funds to appropriate creditors, object to discharge, or certain exemptions a debtor may claim, collect property of the estate, liquidate nonexempt property in the estate, etc.
The Degree Of Involvement
As said earlier, the degree of involvement of the trustee varies from different types of bankruptcy. For example, since in chapter 7 bankruptcy, the role of the trustee is very limited. In chapter 13, the degree of involvement is much more. Moreover, in chapter 11, their job is multi-layered.
Overall, we can see that the job of the bankruptcy trustee is a balancing act. They do not only have to keep the interests of the creditors in mind, but it is also their duty to provide assistance in the smooth performance of the debtor’s plan. In the United States of America, there is an organization “the United States Trustee” that appoints all these trustees.