When learning how the bankruptcy process works, it is not uncommon for a client to ask a bankruptcy attorney about the role of the trustee. Most people have some idea about the roles of lawyers, the judge, creditors, and debtors. There is, however, this unfamiliar figure who plays a major role in cases. Here is what you need to know about the job of the trustee.
What Are Their Qualifications?
Trustees tend to come from one of two backgrounds. A trustee may be trained as a bankruptcy lawyer, but others have been educated as accountants.
The U.S. Department of Justice maintains the Trustee Program. It is a nationwide program, and the country is divided up into 21 regional and 92 field offices. The purpose of the Trustee Program is to verify that fraud and abuse do not enter into the system.
Trustees are drawn from a list the program maintains. They serve as independent contractors and are considered private individuals. The trustee-selection process is a random draw that is initiated at the beginning of a bankruptcy filing.
Whose Interests Do They Represent?
A trustee represents the interests of your creditors as a class. When a Chapter 7 filing is made, the trustee has a responsibility to see that all documents filed by the debtor are accurate. The trustee will also call a meeting of creditors at some point. During this meeting, the debtor will be placed under oath and asked questions by the trustee.
Once the court has issued a ruling, the trustee is expected to initiate the sale of all non-exempt property as quickly as possible and to provide as solid a return to the creditors as practicable. This includes a responsibility for collecting the debtor's non-exempt assets.
How Are They Paid?
Every trustee is paid a small fee. The system, however, sweetens the pot by also offering a percentage commission on all assets that are obtained. This is intended to incentivize the trustee to discover, collect, and sell as much in the way of assets as possible.
The Role of Chapter 13 and 11 Trustees
Chapter 13 and 11 cases are ones where debtors are not liquidating assets. In these instances, the trustee's job is to see that the debtor provides a repayment plan that can actually be executed and is also putting as much in the way of disposable income into repayment as their circumstances may allow.Share