What Is A Bankruptcy Trustee?
When a debtor files bankruptcy, an impartial person known as a bankruptcy trustee is appointed to administer the bankruptcy case. A bankruptcy trustee is appointed in almost every type of bankruptcy case except for Chapter 11 (reorganizations) and Chapter 9 (municipality cases). A bankruptcy trustee is appointed by the United States Trustee, which is an officer of the United States Department of Justice.
The trustee’s duties will depend on the type of bankruptcy case. In general, the trustee reviews the bankruptcy petition and other documents filed by a debtor for accuracy and to detect any possible fraud. The trustee will also meet with the debtor at the Meeting of Creditors, where the debtor will answer the trustee’s questions under oath. (Creditors are also permitted to ask the debtor questions during the Meeting of Creditors, but unless they feel the debtor is hiding assets, creditors rarely attend these meetings.) In a Chapter 13 case, the trustee is also responsible for reviewing the debtor’s proposed payment plan, collecting the debtor’s payments, and distributing the payments to the creditors. In many Chapter 7 bankruptcy cases, the bankruptcy trustee will find no assets to distribute. But if non-exempt assets do exist, the trustee is responsible for collecting those assets, selling them, and remitting the cash proceeds to the creditors.
The bankruptcy trustee will recommend to the court whether the debtor’s bankruptcy should be granted or dismissed. However, the bankruptcy judge has the ultimate authority to make the final determination. In most bankruptcy cases, the debtor has little or no direct contact with the bankruptcy judge. The only bankruptcy official that the debtor is likely to have contact with is the bankruptcy trustee.