Filing for personal bankruptcy can feel like a daunting endeavor. You’ll be introduced to a world of regulations and terms with which you’re likely not familiar. One term that you’ll hear a lot is “trustee.” Most people associate that with estate planning; however, the trustee plays a significant role in the bankruptcy process as well.
When a person files for bankruptcy, a “bankruptcy estate” is created. That estate includes the property belonging to the debtor. A trustee is an impartial person appointed by the court. In some districts, there is one trustee who handles all Chapter 13 bankruptcy cases.
The trustee oversees that estate, with various obligations as defined by law. A bankruptcy trustee’s role, while always a significant one, varies depending on the type of bankruptcy filing and the individual case. It may include reviewing claims by debtors or creditors and challenging aspects of the case.
While trustees in Chapter 7 bankruptcies (which involve liquidation) gather the property to be liquidated and sell it, Chapter 13 bankruptcy trustees have a different role since it’s a reorganization of debt with a repayment plan. In a Chapter 13 bankruptcy, a trustee is charged with:
— Reviewing the proposed repayment plan (and making objections as needed)
— Collecting payments from the debtor
— Distributing payments to creditors
Your New York bankruptcy attorney can provide more information on your trustee’s role in your case and your interactions with the trustee, as well as on the entire process. The better you understand how Chapter 13 bankruptcy works, the smoother the process will be for you as you work to get your financial house in order.
Source: FindLaw, “What is a Trustee in Bankruptcy?,” accessed Sep. 06, 2016