Your mounting debts may cause you to file for bankruptcy protection. If a court approves your petition, expect that you will interact at times with a bankruptcy trustee.
While you might have heard of trustees before, a bankruptcy trustee has specific duties that pertain to executing bankruptcy so you can attain a fresh financial start when the process is over.
Role of a bankruptcy trustee
One task of a bankruptcy trustee is to assess the assets of a debtor to identify properties and possessions that the debtor can sell off to repay creditors. The trustee also reviews the bankruptcy petition you have filed to ensure that the information provided is accurate and complete.
Bankruptcy trustees are also responsible for conducting meetings of creditors. During these meetings, creditors may ask questions and gather information about the case. The trustee ensures that the meeting proceeds in an orderly manner. Finally, trustees provide regular reports to the court, creating a record of the bankruptcy proceedings.
Duties of a bankruptcy trustee
The exact duties of your trustee will vary depending on the type of bankruptcy you file. If you petition for Chapter 13, you can retain ownership of your assets since you will carry out a repayment plan to compensate your creditors. However, since Chapter 7 is liquidation, your trustee will take your non-exempt assets and sell them to generate funds for creditors.
Trustees have other tasks. Sometimes a debtor claims certain assets as exempt, but the trustee retains the authority to object if the trustee believes the exemptions are invalid. Trustees can also initiate avoidance actions to recover funds or assets that the debtor transferred or sold before filing for bankruptcy. This prevents debtors from attempting to shield assets from creditors.
According to The Motley Fool, nearly 414,000 Americans filed for bankruptcy in 2021, so quite a few people interact with a bankruptcy trustee. If you want to use the legal process to unburden yourself from your debt, know that dealing with a trustee is a necessary part of using bankruptcy.