One of the most important pieces to any bankruptcy is the bankruptcy trustee. The trustee will be the one to make most decisions in your bankruptcy. The bankruptcy trustee’s role will depend on the type of bankruptcy that you choose to file (i.e. Chapter 7 or Chapter 13).

Who or what is the bankruptcy trustee?

The bankruptcy trustee is an impartial party that performs a variety of functions in the bankruptcy. For example, the bankruptcy trustee administers the estate and decides whether or not to abandon assets or use them to pay back creditors. The trustee also holds the meeting of the creditors early on in the case so that creditors can ask the debtor questions.1 Further, the trustee in a Chapter 7 bankruptcy has a duty to seize any nonexempt assets that you have to pay off unsecured creditors.2 The trustee will be paid a commission (which decreases as the amount sold goes up) on property that is sold to benefit your unsecured creditors in a Chapter 7 bankruptcy.3 If you do not have any non-exempt assets then you are a no-asset case and the trustee will not sell off assets and will not receive a commission.4

A trustee has similar duties for a Chapter 13 reorganization case. Specifically, the trustee determines whether you have any property to distribute to creditors and how much of it will go to the creditors in your repayment plan. Further, the Chapter 13 bankruptcy trustee will object to improper claims of your creditors, conduct the meeting of creditors, administer your repayment plan, and review your repayment plan.5 The bankruptcy trustee is usually picked by the U.S. trustee at a local level at random.6 Chapter 7 trustees are private citizens, not government employees.7 They are appointed and supervised by the U.S. Trustee to administer a case and they must pass an FBI background check.8 There are about 1,000 Chapter 7 trustees receiving new cases.9

Who or what is the United States bankruptcy trustee?

The United States Trustee Program of the Department of Justice oversees the administration of bankruptcy cases.10 The United States Trustee typically appoints a bankruptcy trustee to administer your bankruptcy case.11 This includes both the liquidation Chapter 7 bankruptcy, Chapter 11 reorganization bankruptcy, and Chapter 13 wage earner reorganization bankruptcy.12 All Federal judicial districts except Alabama and North Carolina are governed by the U.S. Trustee Program, whose mission is to “promote the integrity and efficiency of the bankruptcy system for the benefit of all stakeholders – debtors, creditors, and the public.”13 For example, in Arizona there are two U.S. Trustees that oversee bankruptcies and private trustees – a U.S. Trustee (Ilene J. Lashinsky) and an assistant U.S. Trustee (Elizabeth C. Amorosi).14 There are multiple U.S. Trustees that are appointed by the Attorney General.15 A�U.S. Trustees institute programs at local levels to make sure Chapter 7 panel trustees are selected at random.16 The panel trustees are then paid $60 for each case they administer as a standard fee and then get more based on commission prices (e.g. 25% on the first $5,000 distributed to creditors).17

Call to speak directly with the experienced bankruptcy attorneys at Ariano & Reppucci to find out more about who the bankruptcy trustee is.

[1] The Bankruptcy Trustee Helps You Through Your Case, bankruptcy.lawyers.com, http://bankruptcy.lawyers.com/consumer-bankruptcy/the-bankruptcy-trustee-helps-you-through-your-case.html (last visited Jan. 27, 2015).

2 Stephen Elias, What Does The Chapter 7 Bankruptcy Trustee Do?, alllaw.com, http://www.alllaw.com/articles/nolo/bankruptcy/chapter-7-trustee.html (last visited Jan. 28, 2015).

3 Id.

4 Id.

5 Baran Bulkat, The Role Of The Bankruptcy Trustee In Chapter 13, nolo.com, http://www.nolo.com/legal-encyclopedia/bankruptcy-trustee-chapter-13.html (last visited Jan. 28, 2015).

6 Bankruptcy FAQ, nabt.com, http://www.nabt.com/faq.cfm#Q6 (last visited Jan. 28, 2015).

7 Id.

8 Id.

9 Id.

10 About The U.S. Trustee Program, justice.gov, http://www.justice.gov/ust/ (last updated Dec. 8, 2014 12:57 PM).

11 The Bankruptcy Trustee, nolo.com, http://www.nolo.com/legal-encyclopedia/the-bankruptcy-trustee (last visited Jan. 26, 2015).

12 About The Program, justice.gov, http://www.justice.gov/ust/eo/ust_org/ (last updated Mar. 6, 2014 8:48 AM).

13 Id.

14 Nationwide Office Locator, justice.gov, http://www.justice.gov/ust/eo/ust_org/office_locator.htm (last visited Jan. 27, 2015).

15 About The Program, supra note 12.

16 Bankruptcy FAQ, supra note 6.

17 Id.