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What does a trustee do during a consumer bankruptcy?

Trustees play a vital role throughout the process of consumer bankruptcy, whether through Chapter 7 or Chapter 13. Their actions and decisions can greatly impact how a bankruptcy proceeds. 

In a bankruptcy case, trustees are appointed to oversee the bankruptcy estate, comprised of the debtor's property. Although the specific actions a bankruptcy trustee might need to take will vary from case to case, there are some basic duties that are similar in each Chapter 7 or Chapter 13 case. 

Consumer bankruptcy trustees are appointed and supervised by a U.S. Trustee. The private trustee's roles and responsibilities vary depending on whether a Chapter 7 or Chapter 13 bankruptcy has been filed.

Chapter 7 trustees:

  • Gather all of a debtor's property into a bankruptcy estate
  • Sell the property in the bankruptcy estate, if applicable
  • Review creditor claims and challenge them when appropriate
  • Distribute sale proceeds to creditors with valid claims
  • Object to a liquidation bankruptcy if there are grounds to do so

Chapter 13 trustees:

  • Review a debtor's proposed three- to five-year repayment plan
  • Make changes to the plan, or object to the plan, as necessary
  • Receive payments from the debtor according to the agreed repayment terms
  • Distribute payments to creditors/collectors according to the established plan

As with any legal case, during a bankruptcy you can benefit from the advice, guidance and advocacy of an experienced bankruptcy attorney. With legal representation, you can ensure that you find the bankruptcy option that suits your needs and transition through the application process as smoothly as possible.

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Lexington, KY 40507

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