What Does a Bankruptcy Trustee Do?

 Posted on September 16, 2019 in Bankruptcy Procedure

The most common types of bankruptcies that are filed in the United States are Chapter 7 and Chapter 13 bankruptcies. There are many differences between a Chapter 7 bankruptcy and a Chapter 13 bankruptcy, mainly in the way that the debts are handled. While these two types of bankruptcies differ greatly in many aspects, they do have one thing in common -- they both utilize a bankruptcy trustee.

If you have thought about getting a bankruptcy or you have done research about getting one, you have probably come across the term -- but do you know what a bankruptcy trustee is? It is important to understand the role of the trustee if you are getting a bankruptcy or considering one.

What Is a Bankruptcy Trustee?

A bankruptcy trustee is a person who works on a bankruptcy case to act as the middleman between the debtor and the creditors. The trustee is not an employee of the bankruptcy court, but rather an independent contractor who is hired to prevent the court itself from having to collect and/or distribute property. Trustees are also responsible for reviewing all financial information that is submitted by the debtor to ensure it is accurate and true.

Trustees in a Chapter 7 Bankruptcy

In a Chapter 7 bankruptcy, or liquidation bankruptcy, your non-exempt assets are liquidated or sold so that you can repay as much of your debt as possible before the rest of it is discharged. A trustee in a Chapter 7 bankruptcy is responsible for determining which of your assets are non-exempt and using the money from those to repay your debtors.

Trustees in a Chapter 13 Bankruptcy

In a Chapter 13 bankruptcy, you reorganize your debts so that you can come up with a three- to five-year repayment plan to pay back all or most of your debts. In this type of bankruptcy, your trustee is responsible for overseeing the repayment plan. He or she will collect your payment each month and distribute it to your debtors.

Questions About the Bankruptcy Process? A San Antonio, TX Bankruptcy Attorney Can Help

Making the decision to file for bankruptcy is a serious one. Your credit score will be affected and the bankruptcy will appear on your credit report for a number of years. Ultimately, the bankruptcy trustee can affect your bankruptcy case for the good or the better, which is why it is important to understand their role in your bankruptcy case. If you are thinking about filing for bankruptcy, you should talk with a knowledgeable Boerne, TX bankruptcy lawyer. At the Law Offices of Chance M. McGhee, we can help make sure your bankruptcy process is smooth and as stress-free as possible. Call our office today at 210-342-3400 to schedule a free consultation.

Sources:

https://www.investopedia.com/terms/b/bankruptcy-trustee.asp

https://www.creditkarma.com/advice/i/bankruptcy-trustee/

https://www.thebalance.com/who-is-a-bankruptcy-trustee-316199