ROLE OF THE BANKRUPTCY CASE TRUSTEE
Posted on 02 13,2013
Bankruptcy case trustees play an important role in both maximizing repayment to creditors and protecting debtors from unfair claims. When a debtor enters into Chapter 7 bankruptcy, a case trustee will be assigned to oversee the liquidation of certain types of property owned by the debtor. In Chapter 7 bankruptcy cases—which allows individuals to have many of their debts discharged—the debtor is legally entitled to keep certain assets (known as exempt assets). Other assets (known as non-exempt assets), however, must be surrendered to the trustee. The case trustee then oversees the liquidation—or selling—of those assets or the debtor's interests in those assets. The funds from the liquidation are used to pay the necessary expenses and then to pay back certain creditors, a process that the trustee also oversees. In Chapter 13 cases, involve repayment plans instead of immediate debt discharge, the trustee is responsible for collecting regular payments from the debtor and distributing those funds to the appropriate creditors.
According to the United States Courts website, the bankruptcy case trustee's primary role is to liquidate the debtor's assets in a way that allows creditors to recovery as much repayment as possible. The individual additionally provides a benefit to debtors by handling the complicated details of the asset sales and by also rejecting claims by creditors that they are not actually entitled to. This case trustee, appointed by the U.S. Trustee, helps ensure that bankruptcy laws are being properly adhered to and that no fraud is taking place. For example, the trustee will verify financial information provided by the debtor and can even ask the debtor questions under oath in a meeting of creditors about his or her financial statements. In some bankruptcy cases in which a business is the debtor, the trustee could even be given the authority to oversee the business' operation for a certain amount of time in order to improve the liquidation process, as defined in federal bankruptcy law.
When a case trustee is handling a bankruptcy estate, or the property being liquidated, that individual will be responsible for paying back creditors according to priority level, or by their classes of claims. This means that certain classes of creditors will, by law, need to be paid in full before the next class of creditors can receive any payment.
McCormick & Calderón is a bankruptcy law firm in Virginia Beach that provides assistance for individuals who are undergoing either Chapter 7 bankruptcy or Chapter 13 bankruptcy. Our attorneys have years of experience and are fully capable of answering any questions you might have about the bankruptcy process. Contact us today to learn more about your bankruptcy case and your options for managing your debt!