What A Trustee Does in A Chapter 13 Bankruptcy Case
If you’ve decided to file a Chapter 13 bankruptcy, then you’re probably wondering why the bankruptcy court appointed a trustee over your case. Bankruptcy trustees are there to guide debtors in creating their repayment plan and make sure that the three-to-five-year payment plan is followed to the letter.
Under bankruptcy law, there is nothing you can do to dismiss your trustee when filing bankruptcy. Instead, understanding their duties and obligation will help you as a debtor have a smoother bankruptcy process. Aside from being your guide in court, your bankruptcy trustee normally checks your tax returns before your bankruptcy filing, collects your payments and handles liquidation to your creditors, watches over your income and expenses, and oversee that you pay off your nondischargeable debts.
However since they cannot give you legal advice, you should work with a bankruptcy attorney to negotiate a fair plan and apply certain bankruptcy exemptions to your case.
Chapter 13 Trustee Roles
How active bankruptcy trustees are dependent on whether you reside in a suburban or rural judicial district or in districts where there is a high number of Chapter 13 bankruptcies filed. Below are the duties and responsibilities of a bankruptcy overseer:
Review Bankruptcy Forms. The trustee verifies the information you provided by cross-checking your official forms and looking over relevant data about income, living expenses, assets, debts, paychecks, bank statements, and accounts. It is important to ensure that you have all the needed documents before filing your petition. Don’t misrepresent any data or fail to declare certain information to avoid jeopardizing your case.
Oversee the Bankruptcy Petition. A borrower declaring a Chapter 13 bankruptcy will have to propose a new repayment plan that outlines how they can repay some or all of what they owe to their lenders. The trustee is there to make sure that the conditions are fair between you and a lender. Borrowers also receive financial help in terms of creating a realistic budget that fits their intent to repay creditors.
Assess Property Value. When you file bankruptcy, you will need to give up certain non-exempt properties on assets in an estate and a hearing is conducted to appraise the value of each property. You can get a list of exemptions in your state online or from any bankruptcy law firm near you. Trustees attend this court meeting and may opt to invite an appraiser to help get a more accurate estimate of your assets’ net worth.
Administer the Meeting of Creditors. One month after filing for bankruptcy, the trustee will call for a meeting with creditors. The filer will answer questions related to their bankruptcy paperwork under oath to determine the viability of their proposed repayment plan. Any creditor present during this meeting may also raise any question on your case. Should you lack supporting documentation, the meeting may be postponed to another date. Your trustee will also protect you from any unlawful claims filed by a creditor with no proper documentation.
Monitor monthly payments. A month after your filed bankruptcy, you should start giving payments to your bankruptcy trustee following the terms of your proposed plan. It remains a proposal until the court approves or denies it. If approval is granted, the trustee who currently holds the funds will start releasing it to the lending companies or individuals.
Attend Court Confirmation.If a lender has any objection to the court confirmation, you will have to create an opposition to support the plan. The trustee then attends a confirmation hearing to advise the bankruptcy judge if your plan meets all legal requirements.
Modify repayment plans. Should you miss out on your payments, a trustee can provide you a reprieve. For the most part, you have control over your money after filing for bankruptcy provided that you regularly pay off secured debts. Should your financial situation change, such as when your regular income increases or a property value becomes raised, the trustee can have your payment schedule amended. The opposite is also true: if your earnings are lower, the trustee can adjust the payment terms or even advise you to convert to a Chapter 7 bankruptcy.
Trustee in Bankruptcy
In exchange for these numerous services, the court-appointed trustee normally gets a percentage of the money disbursed to creditors. This is perhaps one of the things that bankruptcy filers forget to consider when deciding to apply for bankruptcy.
Are you going through financial problems and need help in reviewing your bankruptcy paperwork, checking for compliance with bankruptcy laws, or exploring bankruptcy options? Contact Northwest Debt Relief Law Firm today.
Our bankruptcy attorneys have filed numerous Chapter 7 and 13 bankruptcy cases in the past and can give you a free consultation to get you started on the road to financial recovery and debt management.