When you file for Chapter 7 or Chapter 13 bankruptcy, you will have a trustee appointed to your case. The bankruptcy trustee will have various roles – depending on the circumstances of your particular case. But, regardless of whether you are filing for Chapter 7 or 13, the trustee is there to review the petition to the court, look for any red flags and fraudulent claims, and maximize the amount of money that your creditors will receive once the bankruptcy is finished.
Who Pays the Bankruptcy Trustee?
Your trustee will be paid based on the type of bankruptcy that you are filing for and the circumstances of that petition. If you have no assets in your case for the trustee to sell, then the trustee will only collect money through tax refunds, lawsuits, and other actions. Sometimes, you can pay an administrative fee as part of your filing fee. In Chapter 13 bankruptcy, the trustee will receive compensation through a percentage of your payment plan (once approved by the court). There will be a limitation of the salary – so you do not have to worry that you are paying a majority of your money to the trustee instead of your creditors.
Who Do They Represent?
While trustees may appear to be on your side, the fact is that the they is there for your creditors. They are there to ensure that you are not making false claims in your petition, but also to ensure that your creditors receive maximum payment (as much as possible, at least) for your unpaid debts before they are resolved in bankruptcy. But, you must also realize that the trustee is not an employee of the creditors. Instead, they represent your estate as a whole and look for the best interests of you and the creditors alike. They are looking for ways to convert your assets into cash and help reduce the settlement value – or even your payments required if you choose Chapter 13.
Duties of a Trustee
The trustee assigned to your bankruptcy case will have many duties – and those duties can vary depending on the type of bankruptcy you are filing. Some general duties that they will perform include:
- Objecting to your claims for exemptions when it is appropriate.
- Protecting and preserving all assets within your estate or business.
- Pursing any actions against creditors who received fraudulent transfers.
- Reviewing records and investigating financial transactions to assess your petition.
- Objecting to creditor claims that are inappropriate.
- Reviewing your bankruptcy petition and all associated documentation.
- Examining the bankruptcy filer under oath.
- Liquidating any non-exempt assets in order to pay down debts outstanding.
- Avoiding transfers or security interests.
Your trustee also has the duty to object to your discharge of debts if he or she feels that you are not entitled to dissolve a particular debt under the law. Your trustee does not work on his or her own, either. The trustee will be directly supervised by the Office of the United States Trustee – which is a division of the Department of Justice. Trustees will have their own supervisors to report to and other reports be to issued, and they will work in accordance to all applicable state laws.
Are You Considering Bankruptcy? Contact a Bankruptcy Attorney Right Away
If you are considering consumer bankruptcy – whether Chapter 7 or Chapter 13 – it is important that you speak with an attorney first. An attorney can help you decide which type of bankruptcy is right for your financial situation, but also ensure that the trustee assigned to your case is ethical and meets the standards under the law. To explore your options for bankruptcy, contact the attorneys at Hames, Anderson, Whitlow & O’Leary today. You can schedule a consultation now at 509-586-7797, or fill out our online contact form with your legal questions.