Regardless of the type of personal bankruptcy case you are filing, you are likely going to have a trustee involved.
If this is your first time filing for bankruptcy, you may have questions about what the role of a trustee is, and what exactly he or she does. Because Chapter 7 and Chapter 13 bankruptcies have different results, the role of the trustee is different depending on the type of bankruptcy.
Chapter 7 bankruptcy trustees
During a Chapter 7 bankruptcy, you must pay back what you can to your creditors, and the rest of your debts will likely see a discharge. According to FindLaw experts, the following are duties of the trustee during a Chapter 7 bankruptcy:
- Collecting all eligible assets from you
- Liquidating the eligible assets to satisfy as much of the debt as possible
- Challenging creditors’ claims if necessary
- Administering the proceeds of your assets to your creditors
- Objecting to a discharge, in certain cases
Chapter 13 bankruptcy trustees
During a Chapter 13 bankruptcy, debts do not see discharge. Instead, you keep your assets and property and devise a repayment plan to satisfy your creditors over the next three to five years. During this type of bankruptcy, the following duties belong to the trustee:
- Examining your suggested repayment plan
- Making changes to the repayment plan, if necessary
- Receiving payments from you towards the repayment plan
- Distributing funds to your creditors per the repayment plan agreement
A bankruptcy trustee plays a vital role in helping you achieve your end goal in both scenarios. It is often easier to have another party collect and sell assets instead of doing it yourself. Additionally, you may find that one single payment to a trustee is much easier than multiple payments.