Virtually every Chapter 7 and Chapter 13 bankruptcy case will have an agent appointed to perform various duties, depending on the details of the case. These Trustees are appointed by the U. S. Trustees Office which is a department in the Department of Justice.
Much like a trustee of an estate of a deceased person, the Bankruptcy Trustee is in charge of the distribution of property and repayment. In fact, when a person files for bankruptcy, a “bankruptcy estate” is created that is made up of the property and assets owned by the person filing for bankruptcy. It is its own legal entity that is out of control of the debtor, just like a person’s estate is handled by the executor of the estate (Trustee).
Chapter 7 bankruptcy involves the potential liquidation of the debtor’s assets in order to repay his or her creditors as much of the money as possible that is owed them. Therefore, a Trustee in a Ch. 7 bankruptcy case would gather the estate’s property, sell it, and distribute the resulting monies to the debtor’s creditors. Alternatively you as a debtor are given the opportunity to repurchase your own stuff to avoid having the Trustee sell it.
The Trustee receives a fee for the paperwork and they get a percentage of the amount received into the estate. This fee is a double-edged sword however, since the Trustee is paid by a percentage of estate, they are also incentivized to find any assets that you may have excluded in your asset disclosure.
In a Chapter 13 bankruptcy, there is no liquidation of property so the duties of the Trustee are different. The debtor works with their bankruptcy attorney to come up with a repayment plan that fits the debtor’s means and the Trustee will review it and determine whether or not it is adequate for repayment under the Bankruptcy Code and object, if necessary. The Ch. 13 Trustee is responsible for distributing your payments to your creditors in the case based upon their pro rata share.
The Trustee will need pay stubs and tax returns along with the list of assets. They will verify income with information the state has and look for any recent transfers of money or assets to family members or friends. If they discover that a debtor has been untruthful or attempted to hide assets, it may be reported to the bankruptcy court, the United States Trustee and others.
It is important that a debtor never lies or misrepresents assets to the Trustee. It is the job of the Trustee to verify the information given as it is their job to report inaccuracies. Trying to hide assets (including money) from the court could result in an immediate dismissal of the case and the debtor would still be responsible for repayment of the debts and could be barred from including those debts in any future bankruptcy filings or barred from filing a bankruptcy altogether.
The law offices of Miller, Hollander & Jeda are experts in the field of bankruptcy law and for almost 40 years have been helping their clients navigate the murky waters of the bankruptcy process and get a fresh financial start. If you’re considering bankruptcy as a solution to your high debt, call Miller, Hollander & Jeda today at (239)775-2000 for a free consultation.
Copyright © 2022 | Miller, Hollander & Jeda