Before filing for bankruptcy, it is important to clearly understand how the process works. This article focuses on the role that the trustee plays in the different Chapters of bankruptcy.
What is a trustee?
The trustee is appointed by the committee of the United States Trustee Program to represent the creditor. The Trustee sees to it that borrower gets through the bankruptcy procedures without any complications.
The trustee performs varying duties, depending on the Chapter of Bankruptcy filed. For example, he may be in charge to oversee the liquidation of the assets and distribute the proceeds to corresponding creditors.
Let’s discuss the trustee’s role in each of these three types of bankruptcy:
Chapter 7 Bankruptcy
A borrower who qualifies for a Chapter 7 Bankruptcy usually do not have assets that can be used for liquidation. If there are properties, the Trustee will be the one to supervise the liquidation.
The trustee must make sure that the borrower properly cooperates with the ruling of the bankruptcy court. If the borrower commits fraud or any act of perjury, a trustee can refuse the complete discharge of the debts.
Chapter 13 Bankruptcy
The Chapter 13 bankruptcy subjects the borrower under a mandatory repayment program. It is the trustee’s duty to ensure that the borrower is keeping up with the repayment program.
The trustee must make sure that the corresponding creditors are paid on time. The trustee must also be present in the court during sessions.
Chapter 11 Bankruptcy
Under Chapter 11 Bankruptcy, the Trustee will appoint an official committee that will be in charge to keep financial records, see to it that the schedules are followed, and conduct an investigation in case fraud or abuse is suspected.
Although the trustee primarily represents the creditor, it is also his duty to assist the bankruptcy applicant with the whole procedure. The trustee must also give the necessary advice on financial management.
Borrowers must cooperate with their designated trustees to avoid complications in between the bankruptcy process. Always keep in mind that the trustee has the power to refuse your claims should you fail to follow the process accordingly.
