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When you file for bankruptcy, the prime role is that of the trustee. Starting from cross-checking all the documents submitted by you to divide the money between creditors, all the work is overseen by the trustee. However, the roles may vary depending on the chapter of bankruptcy that you file under. Let’s find out in detail.
What do you understand by the term bankruptcy trustee?
As defined by the Trustee program – a trustee is a watchdog over the entire bankruptcy procedure. They are required to oversee the entire procedure of bankruptcy – be it administrative, accounting, management, or legal depending on the case or bankruptcy chapter.
When an individual or business files for bankruptcy, they are directly appointed a trustee from the court who monitors the complete action of the bankruptcy parties and ensures that it is followed through as per legal compliance.
The fees of the bankruptcy trustee are paid by the administration. Along with that, a trustee may also be paid for the overhead expenses that they make along with compensation for their services. The fees may also vary depending on the chapter you file under. For example in chapters 7 and 11, the trustee is paid a commission based on the percentage of the money paid as secured claims.
Role of trustees based on the chapter that you file under
- Chapter 7 – an individual or a business can file for bankruptcy under chapter 7. The role of the trustee under this chapter is to help the debtor get a fresh start. When bankruptcy is filed under chapter 7, the trustee helps liquidate the property and assets of the filer to help pay off the creditors due. So the main role of the trustee under this chapter is to sell of the assets of the filer, convert the value into cash and pay off the creditors. The trustees are known as the panel trustee.
- Chapter 13 – Under chapter 13, the trustee mainly acts as the disbursing agent. When an individual files for bankruptcy under chapter 13, they get to catch-up on their payments and can pay off their debts with the help of a 3-5 year repayment plan as approved by the court. The trustee, who is the disbursing agent, takes the payment from the debtor and distributes them to the creditors based on the repayment plan. The trustees under this chapter re also known as standing trustees.
- Chapter 11 – chapter 11 is mainly for business who wish to file for bankruptcy. Under this chapter, the business can continue to run its operations normally and at the same time organize and pay off the debts. Mostly under this chapter no trustee is appointed, however if, under any circumstances the court appoints a trustee, then the trustee will take control of the debtors business and assets duering the reorganization period.
If you are looking to file for bankruptcy and want to get a consultation from the best attorney firm in town, then you can get in touch with recovery law group. All you need to do is log on to their website – https://www.recoverylawgroup.com/bankruptcy/ and book an appointment with them.