Trustees: Watchdogs of the Bankruptcy Process

For each bankruptcy filed, there is a unbiased trustee appointed to oversee your case and its functions. The main purpose of the trustee is to act as a representative for your creditors. The capacities and duties of a trustee vary depending upon the type of bankruptcy filed. Generally though the Trustee operates in two capacities. First, for chapter seven case the trustee is to seize, assess, liquidate, and redistribute funds generated from liquidated assets. Second, in chapter thirteen cases they are to receive the debtors' monthly payments and dispurse them to the creditors accordingly. The trustee does several things to fulfill his roll as a representative for the creditors. The trustee can collect property, object to certain exemptions, object to an individual's discharge, liquidate nonexempt property, and distribute funds to the appropriate creditors. Trustees are also responsible for chairing the meeting of creditors that takes place about 30 days after the date of file. In Chapter 7 cases a trustee's role is relatively limited. Most of the time, you will not have any assets available to be liquidated. However in some cases there are assets to be liquidated and distributed. Under these circumstances the trustee will be in charge of handling such affairs. The trustee also checks in on you exemptions, schedules, and make sure that you are abiding by the procedure that court has laid out for you. The trustee also has the power to deny a chapter 7 discharge if he finds evidence of fraud, perjury, or any other material falsity. Chapter 7 trustees are appointed by a United States Trustee. Chapter 7 trustees serve 1 year terms with the possibility of renew their position. The job of a standing Chapter 13 trustee is much more complex than that of a chapter seven trustee. Chapter 13 trustees main purpose is to manage the bankruptcy estate in such a way as to allow for the Debtor to repay as much as is feasible. The trustee must also attend all hearings, ensure the receipt of all plan payments, and oversee the dispursement of all funds. The United States Attorney General appoints a United States Trustee for each of its twenty-one geographical locations in which each Trustee will serve for a five year term. United States Trustees appoint and supervise the private trustees that manage Chapter 7, 12, and 13 bankruptcies. They also take the necessary legal action to enforce the Bankruptcy Code and to prevent fraud and abuse. Another responsibility that falls on the U.S. Trustee is to refer certain situations to be investigated for criminal acts. U.S. Trustees also appoint the creditors' committees in Chapter 11 business reorganizations. The U.S. Trustees mission statement proclaims that their primary role is to be a "watchdog over the bankruptcy process."

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