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What are the duties of a bankruptcy trustee?

Filing for bankruptcy can be intimidating if a person has not done so before. Those in Tennessee contemplating bankruptcy may want to learn more about the process before filing. One aspect they may want to familiarize themselves with is the role of the bankruptcy trustee.

When a person files for bankruptcy, whether it is Chapter 7 bankruptcy or Chapter 13 bankruptcy, a bankruptcy trustee will be appointed to that person's case. Per bankruptcy law, the bankruptcy estate consists of the debtor's property and for legal purposes, is a separate entity from the person who filed for bankruptcy himself or herself.

Therefore, the bankruptcy estate is not actually a human being. This is where the bankruptcy trustee steps in to manage the bankruptcy estate.

In a Chapter 7 bankruptcy, the bankruptcy trustee has a number of duties. First, the bankruptcy trustee must collect all of the person's assets. Then, the bankruptcy trustee must sell the assets in the bankruptcy estate. The bankruptcy trustee will then distribute the proceeds from the sale to the person's creditors. If needed, a bankruptcy trustee can challenge a creditor's claim and can object to a discharge of the bankruptcy.

In a Chapter 13 bankruptcy, the bankruptcy trustee will review the proffered repayment plan. If needed, the bankruptcy trustee can object to the plan. The bankruptcy trustee is then responsible for collecting the debtor's payments, per the repayment plan. The bankruptcy trustee passes these payments on to the debtor's creditors.

As this shows, the bankruptcy trustee plays an important role in both Chapter 7 and Chapter 13 bankruptcies. To learn more about the duties of a bankruptcy trustee, a person may want to seek legal advice.

Source: FindLaw.com, "What is a Trustee in Bankruptcy," accessed on Dec. 24, 2016

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Kenneth C. Rannick, P.C.
4416 Brainerd Road
Chattanooga, TN 37411

Phone: 423-954-7180
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Fax: 423-624-0509
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