When a person files a Chapter 7 or Chapter 13 bankruptcy case, the bankruptcy court appoints a “Trustee” to administer the case. Typically such persons are attorneys, but sometimes they are persons with accounting or other backgrounds.
What does a bankruptcy trustee do?
The bankruptcy trustee reviews the bankruptcy filers petition, schedules, statements and supporting paperwork. He or she determines whether or not the paperwork is properly completed according to the bankruptcy laws and rules. The trustee makes an initial determination whether or not the filer has met the requirements to file bankruptcy and receive a discharge.
The Trustee examines the bankruptcy filer in person at the Meeting of Creditors.
Chapter 7 Trustee
In a Chapter 7 bankruptcy case, the trustee investigates whether or not the debtor has any non-exempt assets. Nonexempt assets are money, property or items that are not protected from being liquidated and sold by the trustee. The Trustee will recover nonexempt (unprotected) property, sell the property, and pay creditors in a way specified by law. However, relatively few cases result in liquidation of property.
The Chapter 7 bankruptcy trustee is paid a fixed sum of money for every case assigned to him or her. To help motivate the trustee to discover and liquidate assets, the trustee is also paid a percentage of any nonexempt property that is recovered and sold.
Chapter 13 Trustee
In a Chapter 13 case, one of the trustee’s primary functions is to determine how much a person can pay each month into the repayment plan in order to repay the creditors. The trustee reviews a bankruptcy filer’s income, expenses, and other financial information to determine whether the proposed repayment plan is feasible and fair. Furthermore, the Chapter 13 trustee receives payments from debtors and disburses plan payments to creditors.
The Chapter 13 trustee is paid a percentage (up to 10%) of the each total monthly payment.
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