The Role of Bankruptcy Trustees in Texas

 Posted on April 16, 2024 in Bankruptcy

If you are overwhelmed by debt, filing for bankruptcy is often a great way to get some breathing room again. However, bankruptcy is not simply filling out forms and attending a court hearing. It involves various parties, each with particular roles and responsibilities, working together to ensure that the case is handled fairly and in accordance with state and federal laws. One of the most important players in this process is the bankruptcy trustee. A Texas lawyer can help you figure out the steps and how a trustee is beneficial.

What is a Bankruptcy Trustee?

A bankruptcy trustee is an impartial individual appointed by the court to oversee the bankruptcy process. In Texas, the United States Trustee’s Office appoints bankruptcy trustees for Chapter 7 and Chapter 13 cases. These trustees manage the debtor’s assets, review financial documents, and ensure the bankruptcy case proceeds smoothly.

Duties of a Bankruptcy Trustee in Chapter 7 Cases

In a Chapter 7 bankruptcy case, the trustee’s primary obligation is to sell the debtor’s assets that are not exempt and distribute the funds to creditors. The trustee will:

• Review the debtor’s bankruptcy petition and schedules to identify assets and liabilities
• Conduct a meeting of creditors, known as a 341 meeting, to ask the debtor questions under oath
• Investigate the debtor’s financial affairs to uncover any hidden assets or fraudulent transfers
• Sell non-exempt assets and distribute the proceeds to creditors according to the priority established by the Bankruptcy Code
• Object to any improper exemptions claimed by the debtor

Duties of a Bankruptcy Trustee in Chapter 13 Case

In a Chapter 13 bankruptcy case, the trustee administers the debtor’s repayment plan. The trustee will:

• Review the debtor’s proposed repayment plan to ensure it meets the requirements of the Bankruptcy Code
• Collect monthly payments from the debtor and distribute them to creditors according to the terms of the repayment plan
• Monitor the debtor’s financial situation throughout the repayment period to ensure eligibility remains for Chapter 13 relief
• Recommend modifications to the repayment plan if the debtor’s financial circumstances change
• Object to any improper provisions in the repayment plan or any attempts by the debtor to abuse the bankruptcy system

The Importance of Cooperating with a Bankruptcy Trustee

Debtors must cooperate with the bankruptcy trustee throughout the bankruptcy process. This includes providing accurate and complete financial information, attending the meeting of creditors, and surrendering non-exempt assets when required. Failure to cooperate with the trustee can result in the dismissal of the bankruptcy case or even criminal charges in fraud cases.

Contact a San Antonio, TX Bankruptcy Lawyer

Given the complex nature of bankruptcy law and the critical role played by bankruptcy trustees, it is beneficial to work with a Kerrville, TX bankruptcy attorney. Chance is currently a Director of the San Antonio Bankruptcy Bar Association, so you can be reassured that you will be in good hands. Call Law Offices of Chance M. McGhee at 210-342-3400 for a free consultation.