Bankruptcy Trustee FAQ
In this article
- What Is a Trustee in Bankruptcy?
- Who Is the U.S. Trustee?
- Does the Trustee Run the Creditors’ Meeting in Bankruptcy?
- What Happens After the Creditors’ Meeting?
- Can the Trustee Ask About Future Tax Filings?
- How Do I Find a Trustee-Approved Credit Counseling Program?
- Can the Trustee Give Me Legal Advice?
- What if I Still Have Questions About Bankruptcy Trustees?
Bankruptcy law can be confusing. In bankruptcy court, the judge will appoint a trustee to handle your bankruptcy. To help you understand what to expect, here are answers to frequently asked questions (FAQs) about bankruptcy trustees, what they do, and when they are used in bankruptcy cases.
If you have more specific questions about whether you should file bankruptcy, talk to a bankruptcy attorney about the bankruptcy process
In bankruptcy proceedings, the bankruptcy judge assigns a case trustee. Chapter 11 filings may not require a trustee, but they are generally required in Chapter 7, Chapter 12, and Chapter 13 bankruptcies.
In a Chapter 7 liquidation bankruptcy, the trustee is a panel trustee. In Chapter 12 and 13 bankruptcy, a standing trustee will handle the case. The job of the trustee is to administer the bankruptcy estate and repayment plan. Their role is to try and collect as much as possible for the creditors. After the bankruptcy petition is filed, the trustee also runs the meeting of creditors.
In a Chapter 7 bankruptcy, the trustee takes over control of your non-exempt property and assets to sell. The trustee uses the money to pay secured and unsecured debts. In Chapter 13, the trustee collects payments from you and uses that money to pay the creditors based on the approved payment plan.
The United States Trustee Office (UST) appoints trustees in bankruptcy cases. The UST is a watchdog agency and part of the Department of Justice. The UST monitors bankruptcies, appoints trustees, and watches for any signs of possible fraud in bankruptcy cases. The UST reviews bankruptcy filing petitions and can participate in bankruptcy proceedings.
The UST is separate from the bankruptcy court and is not paid by the court. Instead, the trustee is paid out of the filing fees or the debtor’s estate.
If the UST identifies fraud or the debtor is not cooperating, the UST can file a motion denying the debtor’s discharge or dismissing the bankruptcy case. If there are problems with the trustee appointed in your bankruptcy case, you can contact the UST and report your concerns. You can also use the Justice Department’s trustee locator to get contact information for the trustee in your case.
A meeting of creditors is required in bankruptcy cases. The meeting is separate from a court proceeding, and the bankruptcy judge is not present. Instead, the trustee holds the meeting, usually between 20 to 40 days after filing the bankruptcy petition. Creditors generally do not have to attend this meeting.
In Chapter 7 bankruptcy, Chapter 12 bankruptcy, and Chapter 13 bankruptcy, the trustee assigned by the court will conduct the hearing. In Chapter 11 bankruptcy, where there is no trustee, a representative of the UST will generally call the hearing.
As part of the meeting, the trustee will examine your financial situation. This includes reviewing your petition and financial information, including your:
- Assets and liabilities
- Executor contracts and unexpired leases
- Income and expenses
- Statement of financial affairs
The trustee will question you about your conduct, liabilities, actions, and anything else that might affect the estate administration. The trustee’s questions help them understand your financial situation and how they can quickly and efficiently administer the estate to maximize repayment to the creditors.
Lenders and creditors can also attend the meeting and ask you about certain assets and other relevant information.
The meeting of creditors usually only lasts for a short time, and few or none of the creditors may show up. However, the trustee can reconvene the meeting if you are not cooperating with the process or if the trustee wants additional information. The trustee can also request a dismissal of the bankruptcy case if you fail to show up or cooperate with the hearing.
A Chapter 13 trustee must verify that the debtor filed their tax returns, including filing future tax returns under the Chapter 13 plan. The trustee can get a copy of the tax returns and ask the debtor to swear under oath that they filed their taxes.
Before filing for bankruptcy, you must complete pre-bankruptcy credit counseling. To find an approved credit counseling program, you can use the U.S. Trustee website.
The trustee does not represent the person filing for bankruptcy. Instead, the trustee performs their duties to maximize the returns for creditors. Trustees do not have to be lawyers. The court does not pay trustees. There is no attorney-client relationship with a trustee. If you want legal advice, talk to a bankruptcy lawyer about your options.
This only covers some of what a trustee does in bankruptcy. If you have questions about which type of bankruptcy is right for you, talk to an experienced bankruptcy lawyer for advice.
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