top of page

Bankruptcy Trustee: An Advocate For Creditors

When a client and their attorney file for bankruptcy it is not automatically presumed that everything listed on the petition is the exact truth. Attorneys will not file any claims knowing they are inaccurate, but the attorney is relying on his or her client’s honesty to insure all the appropriate information is available.

In the majority of bankruptcy cases the attorney filing the petition has already gone through the paperwork to determine if any claims being made are inaccurate. Once the case is filed, the trustee will go over all information supplied by the client, looking for inaccuracies or reasons to believe fraud may be involved.

The role of the trustee in bankruptcy is to insure all creditors are treated fairly and that any non-exempt assets are sold for the most money, which is then distributed to the creditors in accordance with their claims.The United States Trustee who is an officer of the Department of Justice appoints trustees. There are no state agencies involved in a bankruptcy proceeding as all matters are handled through the federal bankruptcy courts.

Trustees also participate in creditor meetings. There, the trustee has the power to discharge a creditor’s claim if evidence of fraud or ineligibility is found with the creditor. Additionally, any actions required by new bankruptcy laws concerning money management and budget planning will also be reviewed by the trustee to insure the client is meeting all requirements. Typically, bankruptcy attorneys work with the same trustees on numerous cases and know how the paperwork needs to be filed to meet specific trustee’s concerns. Any concerns with how the trustee handles a case should be left up to the attorney to get answered.

The trustee’s role in bankruptcy differs with the type of bankruptcy filed. Whether Chapter 7, Chapter 13 or a Chapter 11 for businesses, his or her role is to determine the true value of any assets claimed and to protect the creditors from fraudulent claims, insuring they get a fair value of any assets. While a Chapter 13 trustee’s role is more of an overseer, they stay close to the case, representing clients to insure payments are received and distributed according to the court’s plan.

Trustees for Chapter 7 filings generally serve a one-year term while those working with Chapter 13 filings may be standing trustees serving a geographic area or a court region. Some clients may have confusion over the role of a bankruptcy trustee and believe they are more interested in helping creditors than insuring the client receives a fair chance. In most Chapter 7 bankruptcies there are few assets involved, however if there are assets involved the trustee’s responsibilities include liquidating the assets and distributing the money.

With a Chapter 13 bankruptcy filing, the trustee’s job is more administrative as there will be no assets to liquidate. They will make sure the balances claimed to be owed by the client are true and have approval power over the repayment plan. Most attorneys will not file for Chapter 13 for a client if they do not have the means of meeting the payment obligations.

The trustee will accept payments from the client and distribute them to the creditors according to the plan approved by the court.

Call us today and speak directly with an attorney for a free, no obligation, consultation to see if you qualify for bankruptcy and if it is the right decision for you and your family.

Wessler Law Firm is a small family owned law firm specializing in bankruptcy law since 1982.


Disclaimer: This article is meant for reference only, and is not intended to be legal advice.

For legal counsel regarding your situation, please consult an attorney licensed in your state.

Recent Posts
Search By Tags
Follow Us
  • Facebook Basic Square
  • Twitter Basic Square
  • Google+ Basic Square
bottom of page