There may be times in an individual's life when their financial state forces them to have to file for bankruptcy. There are different reasons that individuals find themselves in this position; divorce, loss of employment, large amount of unsecured credit card debt and unexpected medical expenses. Once an individual files their bankruptcy case with the United States Department of Justice, the court automatically appoints a Bankruptcy Trustee to oversee the case.
The role of the Bankruptcy Trustee is dependent upon what type of case it is. For Chapter 7 bankruptcy cases, the primary role of the trustee is to evaluate the bankruptcy estate. The bankruptcy estate is any and all assets that can be turned into cash to satisfy the debtor's obligations. If there are assets that can be sold, the trustee will oversee the sale of the assets and distribute the monies equally amongst the creditors. If there are no assets that can be turned into cash, the trustee reports these findings back to the court and the debtor is discharged of all debts. Keep in mind that creditors may place a lien on your property for certain secured debts.
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The role of the Bankruptcy Trustee in a Chapter 13 is a little different than the role they play in a Chapter 7 case. Chapter 13 does not release the debtor from any of their obligations, instead a repayment plan is constructed that will span for three to five years. The trustee is responsible for evaluating evaluate your financial status; verify the claims of your creditors and coming up with a repayment plan that will satisfy all parties. In Chapter 13 cases, the debtor is allowed to keep all of their assets and no further action can be brought against them by their creditors as long as the repayment schedule is followed.
During the bankruptcy process you will interact with the Bankruptcy Trustee at the bankruptcy hearing. He or she is there to collect information from you about your debts, income and assets. During this meeting you will be sworn in under oath before the trustee begins asking you questions.
The Bankruptcy Trustee can be thought of as a mediator of sorts. Because he or she gathers information from both the debtor and the creditor, verifies their validity and determines the appropriate and fair way to settle the case. Each state has different laws so it is important to obtain an attorney that specializes in the field of bankruptcy.
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