You have finally made the decision. After finishing credit counseling and talking to an attorney, you realize that filing for Chapter 7 bankruptcy is your best option. While gathering all the appropriate paperwork to turn in with your petition, your lawyer clues you in on the next key player in the case, the court-appointed trustee, and advises you to be very accommodating to them, because what they do affects the outcome of your case one hundred percent.
So, what is the crucial role of a bankruptcy trustee?
It is to liquidate any assets and then distribute funds to creditors if there are non-exempt assets. They also hold the meeting between you and your creditors, and the results of this meeting greatly influence the court’s ruling. The trustee does a critical amount of the heavy lifting between you, the court, and your creditors to follow the case through to completion.
If there are no assets to be liquidated, which is most common in individual Chapter 7 cases, it is the role of the trustee to file a “no asset” report with the court.
So, What are the Responsibilities of the Trustee?
The trustee must determine what is an asset that can be liquidated and what is exempt. Once this has been determined, the trustee has to sell any property that is not exempt. This must be done to distribute payments to appropriate creditors.
Within 40 days of filing the petition, the trustee must set up a meeting between you and your creditors. During this meeting, the trustee and the creditors may ask any questions about the case and you must answer under oath. The trustee must make sure that you understand the consequences of filing for bankruptcy at this point. When the meeting is finished, the trustee will report any findings and results to the court.
So, How do they Facilitate Debt Resolution?
The trustee looks at the claims filed by the creditors and decides if they qualify for payment. Then the trustee uses funds from the sale of the assets you have that can be liquidated to resolve debts. These debts are organized in classes and each creditor in a class is paid in full before the next class receives payment. Each state has definitions of what is exempt and non-exempt for Chapter 7 bankruptcy.
If there are no assets to use for debt resolution, the trustee communicates this to the court and the creditors. The trustee can ask for a variety of documents, including tax returns, to support, examine, and verify income and assets.
Related Questions
So, What do Trustees Safeguard?
Trustees are court-appointed and must have an unbiased, objective point of view. They safeguard the protection that bankruptcy offers by making sure you qualify through a means test. They also safeguard your estate, which they are in control of during the bankruptcy process.
So, What Questions Are Asked at the Meeting with Creditors?
The trustee and creditors can ask questions about your accounts and any transactions or properties you have had. They will start with the basics of confirming your identity and move on to details about payments, dependents, and other related factors.
In Sum
The trustee in a Chapter 7 bankruptcy is critical because this is the person responsible for the liquidation of the estate and the payments, if any, to the creditors. The trustee also calls the meeting with the creditors and reports the findings to the court, which greatly affects the case outcome. If ever there was a time for you to show how well you play with others, this is it. Your financial future depends on it.
Guiding the Process
A bankruptcy firm plays a vital role in guiding debtors through the complex and often overwhelming bankruptcy process. With their specialized knowledge and experience, they provide crucial support and assistance every step of the way, including working with the trustee.
Hines Law is a bankruptcy firm in Massachusetts that provides the representation you need during your bankruptcy. Our bankruptcy attorneys will lead you with expert advice and protection as well as help with a plan to move forward. Financial recovery is possible. Call our bankruptcy firm to get started with a Free Consultation.