What Does A Bankruptcy Trustee Do?

Whenever you file a bankruptcy in federal court, a bankruptcy trustee will be appointed to your case. Many people are seeking the relief of bankruptcy to allow them to eliminate debts completely or allow them to repay under the supervision of a court-appointed trustee. In 2003, almost 2 million personal bankruptcies were filed. With so many cases, bankruptcy trustees remained busy throughout the year.

Bankruptcy trustees play several roles in the process, depending what type of bankruptcy you filed. In Chapter 7 bankruptcy, the trustee serves as a representative of the creditors. He decides what assets to liquidate, which are exempt from the process, and determines when the debtor is given a discharge.

The bankruptcy trustee is appointed by the court to oversee your case but is normally not an employee of the government. The trustee can object to certain items being labeled exempt and can protest the debtor's receiving a discharge. The trustee is not the one that makes the ultimate decisions in your case; the judge decides issues between you and the trustee.

Chapter 13 bankruptcy trustees have a similar role as trustees in Chapter 7 cases. They review the petitions and sees if the Bankruptcy Code applies to the matter presented before the court. He helps in the distribution of payments made by the debtor to the creditors involved. One trustee serves a number of cases in Chapter 13 court and is more of an instrument of the creditors than the debtor.

Another bankruptcy trustee is the United States Trustee. Unlike Chapter 7 and Chapter 13 trustees, the federal government employs him. His job is to appoint and supervise the Chapter 7 and Chapter 13 trustees. If abuse or fraud is suspected in a Chapter 7 case, the United States Trustees is in charge of investigating and can appear in court to request a case be denied of discharge. However, over 99% of bankruptcy cases end in discharge.