The responsibilities of a bankruptcy trustee

On Behalf of | Feb 16, 2021 | Bankruptcy, Chapter 13, Chapter 7 |

If a debtor in Florida feels they can not manage their debts anymore, they commonly consider bankruptcy. Bankruptcy helps debtors remove certain debts legally by a liquation process in Chapter 7 and debt repayment under Chapter 13. Each bankruptcy type commonly requires a trustee to manage the case.

Roles of the Chapter 7 bankruptcy trustee

A bankruptcy trustee has some of the most important roles in the case. The bankruptcy system created the role of trustee so creditors would not have the task of collecting and selling debtor assets. When the debtor fill out the petition, the trustee must ensure it has been filled correctly and the debtor qualifies. The court requires Chapter 7 filers to pass a means test to determine if they have sufficient income to pay creditors.

Trustees have the fiduciary responsibility of selling the assets and dividing them among creditors in Chapter 7, and they receive a commission. The trustee also has the task of overseeing the meeting of creditors. The U.S Department of Trustees choose private people to be trustees who have experience in accounting, management and legal issues related to bankruptcy.

Roles of the Chapter 13 bankruptcy trustee

Chapter 13 bankruptcy allows debtors to repay debts slowly under a plan approved by the court. Debtors need to have a steady wage and enough disposable income to qualify for Chapter 13. If the court finds a Chapter 7 filer has enough income to pay debts, they get converted to Chapter 13.

Debtors may be allowed to devise their own repayment plan and submit it for review. The trustee in Chapter 13 ensures the debtor meets eligibility and that the plan treats all creditors fairly. The debtor will also be required to answer questions at the creditors’ meeting conducted by the Chapter 13 trustee.

Bankruptcy relieves debtors of some debt, but a minor error may cause the case to be dismissed. They should consider meeting with an attorney for help with filing a case.