A bankruptcy trustee is primarily responsible for administering a bankruptcy estate. From the adoption of the bankruptcy plan through the creditors’ meeting, the trustees are responsible for ensuring that the process runs seamlessly.
If you filed for bankruptcy, you may wish to know the role of the bankruptcy trustee. In each consumer bankruptcy case, a bankruptcy trustee will be assigned to oversee the proceedings. The trustee is in charge of collecting and organizing debts to repay creditors. The trustee’s job is to safeguard the interests of both the debtor and the creditors.
The trustee’s specific tasks differ based on the type of bankruptcy filed. However, in general, the trustee can:
- Recover the debtor’s property or assets
- Liquidate nonexempt property
- Investigate a debtor’s financial status.
- Approve repayment plans.
- Approve loan cram-downs or lien stripping.
- Object to the debtor’s debt discharge or exemption claims.
- Allocate the estate’s proceeds to creditors according to their priority.
Trustee’s Role in Chapter 7 and 13 Bankruptcies
Trustees have varying responsibilities based on whether the case is a Chapter 7 or Chapter 13.
Some of the Chapter 7 bankruptcy trustee responsibilities include:
- Identifying the debtor’s assets and property that could be auctioned to repay creditors
- Facilitating the sale of debtor’s property
- Objecting to creditors’ claims when they infringe on the debtor’s rights
- Opposing to a discharge when necessary
Chapter 13 trustees are in charge of:
- Evaluating the debtor’s repayment plan and, if necessary, raising concerns
- Supervising and coordinating the “creditors’ meeting”
- Receiving and disbursing payments from the debtor to creditors in accordance with the repayment plan
- If required, raising objections to a repayment arrangement
How Does A Bankruptcy Trustee Find Hidden Assets?
The bankruptcy trustee assigned to the case is adept at searching for any sign of concealed assets. The trustee may use any of the following techniques to locate hidden assets:
- Inspect your budget for reasonableness
- Conduct an examination of your debts (such as plenty of furniture store debt but very little furniture)
- Conduct online asset and public record searches
- Payroll slips indicating deposits into unlisted bank accounts or retirement plans, bank records and tax filings, and reports from a former partner, coworker, friend, or business associates
If the bankruptcy trustee uncovers hidden assets, the trustee will bring a lawsuit in bankruptcy court (known as an adversary process). If the court concludes that you have concealed assets with the goal to obstruct, delay, or defraud creditors, you could face serious consequences or have your discharge delayed or dismissed.
What Happens If You Honestly Forget to List an Asset?
If you didn’t list the assets that the law permits you to keep, you may not be permitted to claim them once they are discovered. However, some assets, such as those you haven’t yet received, are easier to overlook while filling up your bankruptcy schedules.
Some commonly overlooked assets include:
- Retirement benefits
- Insurance claims
- Co-owned assets such as vehicles and real estate)
- Beneficial interests in trusts
- Annuities or lottery winnings being received over time.
As soon as you recognize your mistake, you’ll want to submit paperwork to disclose the asset. If the circumstances reveal you didn’t mean to obstruct or defraud creditors, the court will not deny or revoke your discharge—and correcting before someone else notices the lapse will help.
Meet With a Bankruptcy Lawyer
Dealing with bankruptcy court can be quite agonizing when you fail to follow all the bankruptcy requirements, and there’s no reason to put yourself in that situation. Most bankruptcy lawyers can assist you in achieving your goals while keeping you out of trouble. At the very least, a bankruptcy lawyer will explain why attempting to avoid bankruptcy regulations isn’t worth the supposed gain.
