When you file for bankruptcy under chapter 7, the court appoints a bankruptcy trustee who oversees all the evaluation of the property as well as the distribution of the funds to the creditors after selling the assets. It is important to know that the trustee only acts under the discretion of the court and no final decision can be taken by them unless approved by the bankruptcy court.
What are the responsibilities of a Trustee?
The responsibilities of a trustee vary depending on the chapter of bankruptcy that you are filing under. For example, under chapter 7, the trustee is responsible to take care of the liquidation of the assets along with the distribution of the funds to the creditors. Whereas under chapter 11, the trustee helps the filer to emerge from bankruptcy so that he can start business again.
Understanding the different chapters while filing for bankruptcy
- Chapter 7 – Also known as straight bankruptcy, when an individual files for bankruptcy under chapter 7, they can get rid of all their debts by selling the assets. When one files for bankruptcy under this chapter, the court appoints a trustee who oversees all the matters from evaluating the property to selling it and then further distributing the funds to the creditors. However, to be eligible for bankruptcy under chapter 7, you need to qualify and pass the Means Test.
- Chapter 11 – Chapter 11 is only for businesses and not individuals. This chapter is considered to be one of the most complicated chapters to file for bankruptcy. When a business entity files for bankruptcy under this chapter, all their debts are reorganized which they can pay off over a period of time as decided by the court.
- Chapter 13 – filing for bankruptcy under chapter 13 helps you catch up on your arrears so that you can pay off your debts in part over a period of time. With the help of a trustee, the filer draws a repayment plan based on which they will pay off their debts. This is suitable for people with a regular source of income.
If you are considering filing for bankruptcy, it is important to consult with a law firm who can guide you with both pros and cons to help you proceed. To book an appointment log on to – https://recoverylawgroup.com/bankruptcy/.