What Role Does a Bankruptcy Trustee Play?
Bankruptcy trustees are officers of the court who are charged with representing a debtor’s estate in a bankruptcy action. Both Chapter 7 and 13 bankruptcy actions require the presence of a trustee. While the exact duties will vary from case to case, there are basic activities that the trustee in any type of bankruptcy action is likely to perform. Here are a few examples of the role the trustee will play.
The Trustee in Chapter 7 Bankruptcies
If you should file for a Chapter 7 Brooklyn bankruptcy, the trustee will be in charge of reviewing all the data you submit to the court. That includes information about your assets, debts, and income. Everything that you provide is verified before the judgment is granted. Along the way, the trustee will seek to determine if there are any assets not reported to the court.
Some of your assets may be considered exempt. As bankruptcy lawyers in Brooklyn NY will explain, the court does not sell these assets. They remain in your possession. Other assets are classed as non-exempt. Those assets will be sold and the proceeds used to partially cover your debts. The trustee will oversee the collection and sale of non-exempt assets.
Trustees also review and if necessary challenge any claims submitted by your creditors. In some cases, this will be consulting with your lawyers at Ursulova Law Offices to resolve any differences between the figures you provide and those provided by your creditors.
Once the bankruptcy terms are complete and all disbursements from the sale of non-exempt assets takes places, the trustee determines if the remainder of your debt can be discharged. Assuming that you’ve not included any debts that are considered priority under current bankruptcy laws, the trustee will discharge the remaining debts and you are free to make a fresh start.
The Trustee in a Chapter 13 Bankruptcy
Many of the tasks the trustee performs with Chapter 7 bankruptcies are also relevant to managing a Chapter 13 bankruptcy. The trustee will still verify all the information provided in the original petition and review the proposed repayment plan. The trustee also prepares documentation that is sent to the debtor’s employer, requiring that the monthly payments are withheld and sent to the court.
If the debtor’s income level changes during the Chapter 13, the trustee can authorize adjustments to the amount withheld. The trustee can also provide documents to a new employer if the debtor changes jobs. In the event the debtor experiences a financial emergency, such as medical bills or the need to replace the family car, trustees are empowered to authorize debtors to obtain financing up to agreed upon amounts. In special circumstances, the trustee can authorize a short-term moratorium on submitting payments to the court.
The trustee and his or her staff can also help the debtor understand how to sign up with and use the National Data Center. The NDC site makes is possible to know when payments are received and posted, how the funds are disbursed, and the balances paid to each creditor.
The trustee is charged with distributing your payments to each qualified creditor. Generally, this means disbursing collected funds to priority or secured creditors first, then to non-priority or unsecured creditors. At the end of the three to five year period of your bankruptcy, any unsecured debt remaining is usually discharged, provided you have fulfilled all the requirements related to your Brooklyn bankruptcy.
Bankruptcy is the opportunity to regain control of your finances and begin rebuilding a sound financial future. Talk with the team at Ursulova Law Offices today and find out which form of personal bankruptcy would be best for you.