Once you file for bankruptcy, the court appoints a bankruptcy trustee. The trustee is responsible for overseeing and executing your case, but which bankruptcy you file for will change the trustee's role and actions.
Bankruptcy Trustee's Role and Your Requirements
The first step you’ll have to take is to complete a bankruptcy petition. Within the petition, you’ll provide information on your property, debts, assets, and monthly expenses. After you complete a bankruptcy petition, the trustee will review and verify the information you provided. You may also need to follow this up by sending more information over to the trustee to verify your information (such as pay stubs and tax returns).
The role a trustee plays in your bankruptcy depends on which type of bankruptcy you’re filing: a Chapter 7 or Chapter 13.
Chapter 7 Trustee
The Chapter 7 trustee holds the responsibility for selling any property that isn’t protected and distributing the funds accordingly. You’re allowed to keep some of your property like clothes and furniture. But depending on your state’s exemption status, the trustee can sell any nonexempt assets that are more than the amount allowed by your state. If there aren’t any nonexempt assets involved, the trustee compiles a report stating that your case is a “no asset” case.
Chapter 13 Trustee
A Chapter 13 trustee differs from a Chapter 7 trustee with a focus on your repayment plan. The process of filing a Chapter 13 is the same as a Chapter 7 – you’ll need to provide the same documentation – but differs in the fact you must propose a repayment plan in a Ch. 13.
The trustee will make sure your repayment plan is fair, and you’ll begin making monthly payments to the trustee within 30 days of filing. Your repayment plan must be approved by the court, and the trustee holds your payments until the plan is finalized. Once it’s approved, the trustee then distributes the funds until the bankruptcy is complete.
The Bottom Line
The trustee plays an important part in your bankruptcy journey. They'll be there to help you out with any questions, but keep in mind their role will differ depending on which bankruptcy you file for.
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