When you file for bankruptcy protection, either Chapter 7 or Chapter 13, your Kansas City bankruptcy lawyer will guide you along to a fresh start. Creditors also have someone protecting their interests – the bankruptcy trustee. The bankruptcy trustee is closely involved with every bankruptcy filing from start to finish, and he or she will scrutinize your petition and schedules.
The bankruptcy trustee’s role will vary depending on whether you file for Chapter 7 or Chapter 13 protection.
Chapter 7 and Chapter 13 Trustees
The United States Trustee (UST) appoints the bankruptcy trustee, and while the UST is a government employee, the bankruptcy trustee is not. In fact, bankruptcy trustees are usually attorneys or accountants.
As mentioned above, the bankruptcy trustee is not on your side. He or she looks out for your creditors’ interests throughout the bankruptcy process. In a Chapter 7, the trustee plays a more limited role than in a Chapter 13. The Chapter 7 trustee will be at the first meeting of creditors, which is where your first encounter with the trustee will likely occur. He or she will examine your schedules of assets and exemptions and may ask you questions about them.
If you have non-exempt assets, the trustee will supervise the process of selling them and give the proceeds to your creditors. Many Chapter 7 filings are no-asset cases, but in a case with assets, the trustee earns a commission from the sold assets. The trustee can always object to any of your listed exemptions, but the bankruptcy judge ultimately decides such issues.
The UST appoints the Chapter 13 trustee as well. The Chapter 13 Trustee serves the same function as the Chapter 7 Trustee, but plays a bigger role overall in your bankruptcy. The Chapter 13 trustee will review your repayment plan and make sure you are capable of living up to it. Your monthly payment goes to the trustee and he or she will distribute it to your creditors.
In a Chapter 13, you will repay all, or at least a portion of your debt. Accordingly, you can usually keep your assets. Chapter 13 bankruptcy trustees earn a percentage of the money collected in a Chapter 13 case. It is no surprise that their ultimate goal is to recoup as much money as possible on behalf of your creditors.
If you have any concerns about what role the bankruptcy trustee will play in your filing, contact an experienced Kansas City bankruptcy attorney at The Sader Law Firm.