Cobos Law Firm Blog

When you file for Chapter 7 or Chapter 13 bankruptcy in the United States, a bankruptcy trustee will be appointed to administer your case. The role of the trustee will vary depending on whether you file for Chapter 7 or 13 but his or her primary responsibility is to represent the bankruptcy estate which consists of all of your assets that will be used to satisfy the claims of creditors.

Chapter 7

In the case of a Chapter 7 Bankruptcy, the trustee will review your bankruptcy petition and verify that all information provided is accurate based on the various documentation and calculations that you have submitted. Shortly after you file the petition, the trustee in your case will conduct a 341(a) meeting of creditors which you must attend. Creditors are welcome to attend this hearing (although they often do not) where the trustee will ask you questions about the information contained within your filing. All questions are asked under oath and are meant to serve as further verification of your current financial situation. After the hearing, the trustee will assess and liquidate all of your nonexempt assets to pay your creditors and satisfy outstanding debt.

Chapter 13

As with Chapter 7, the trustee in a Chapter 13 bankruptcy will review the petition and accompanying documentation such as paystubs and monthly bills. When filing for Chapter 13, you will also need to submit a payment plan which your trustee will also carefully review taking into account your income, expenses and debt. If a trustee feels you are able to pay more than proposed, he or she may object in order to maximize the return to creditors. Similarly, he or she may propose lower payments if your proposed terms are not reasonable. As is the case with Chapter 7, a trustee in a Chapter 13 case will also hold a creditor hearing where you will testify under oath about all information contained within your bankruptcy petition. This meeting generally happens about a month after the filing.

After the hearing, creditors are required to file a proof of claim. The trustee in a Chapter 13 case must review all of these documents and may ultimately object to the claims if they fail to provide proper supporting documentation. Once the repayment plan has been finalized, the Trustee will begin distributing funds to creditors. It’s important to note that as soon as you submit your payment plan to your trustee, you must make the proposed monthly payment; however, these funds won’t be distributed until the plan has been finalized and approved. For the duration of the payment plan (3-5 years), all payments will continue to be made to the trustee; you do not pay your creditors directly.

As you work through your bankruptcy, it’s important to remember that the trustee assigned to your case is not on your side or on that of your creditors. Instead, they are to be objective third parties assigned to your case to ensure that your debts are satisfied in a fair manner. An experienced bankruptcy attorney, on the other hand, is your dedicated advocate, ensuring your interests are protected. If you are considering bankruptcy, it’s important that you first consult an attorney who has experience working with trustees and helping individuals just like you get back on their feet.  Call us for a consultation.