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I’m sure that you have heard the term “bankruptcy trustee”. Have you wondered what it means and what they do?

During Chapter 7 or Chapter 13 bankruptcy proceedings, a trustee is appointed by the federal government to oversee the case. In most cases, a bankruptcy attorney or accountant will serve as the trustee. The trustee plays an important role during the bankruptcy process, including:

  • Ensuring debtors are in compliance with regulations
  • Ensuring debtors are honest about their situation
  • Ensuring the debtor is not committing fraud

When a trustee is appointed to your case, they examine information associated with your filing to make sure it is presented correctly to the court. As a result, a trustee may request additional information from the debtor to justify the data in the petition. A bankruptcy case could be dismissed if fraud is suspected.

While both Chapter 7 and Chapter 13 have trustees appointed, their roles differ depending on the chapter filed. Chapter 7 discharges or eliminates qualifying unsecured debts. In Chapter 7, if qualifying assets are present, the trustee would oversee the distribution to creditors if the assets have value. It’s common for debtors to not have assets of significant value when filing this chapter because there are exemptions in place to allow a debtor to keep most assets.

Chapter 13 involves reorganizing debt through a structured payment schedule. This option usually has debtors making payments for a three to five year period. A Chapter 13 trustee makes sure debtors make their payments according to the repayment plan. The trustee will review the plan, oversee the process, and collects payment from debtors to disburse to creditors.

Carolyn Secor P.A. focuses its practice in the areas of Bankruptcy and Foreclosure Defense in Clearwater, Florida. For more information, go to our web site or call 727-335-7151.