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What is the Role of the Bankruptcy Trustee?

| Jul 16, 2013 | Bankruptcy

One of the primary figures in bankruptcy proceedings is the trustee. But just who are these trustees and what purpose do they serve when it comes to bankruptcy?

Trustees are selected as part of the United States Trustee Program, which is overseen by the Department of Justice. The DoJ administers 21 regional US Trustee Offices throughout the nation, and maintains an executive office in Washington, DC. The trustees are meant to represent the public’s best interests in bankruptcy cases, making sure all parties involved conduct themselves according to federal bankruptcy regulations and follow all required procedures. They also report any suspected fraud or abuse of the system to US law enforcement agencies.

US Trustee duties under the federal bankruptcy code

The US Trustee has several important responsibilities depending on the type of bankruptcy proceedings, most of which are supervisory. These generally include the following:

  • Appointing and supervising private trustees to administer estates in Chapter 7, 12 or 13 bankruptcy
  • Alert legal authorities if fraud or abuse of the Bankruptcy Code occur
  • Assemble creditor committees and handles quarterly fees in Chapter 11 cases

Private trustees

Private trustees are appointed and supervised by US Trustees, but are not federal employees themselves. In Chapter 7 cases, they participate as part of a panel, which is assigned in each judicial district and rotate between liquidation cases. Private trustees collect nonexempt assets, sell them off and then distribute the proceeds according to creditor status.

Private trustees in Chapter 12 and Chapter 13 cases have standing appointments from the US Trustee to administer these cases within an assigned region. These standing trustees review your financial status, make recommendations as to whether your proposed repayment plan should be considered viable to the bankruptcy court and administers the approved final plan to completion.

It is very important that you cooperate with the trustee involved in your bankruptcy case while remembering they are not there to represent you or your best interests. That job falls to your bankruptcy attorney, who has the knowledge and experience with Pennsylvania and federal bankruptcy laws to protect you. If you are facing personal or commercial bankruptcy, make sure you seek legal guidance before beginning any official proceedings.