When you file bankruptcy, the United States trustee assigns a private trustee to monitor the case and manage any assets.
The trustee works to prevent fraud and ensures creditors are paid fairly according to the Bankruptcy Code.
As a debtor in bankruptcy, you will encounter the trustee during the 341 meeting of creditors and when providing assets or payments to the estate.
At Blake Goodman, PC, Attorney, we have positive relationships with Hawaii’s trustees. We will assist you in all interactions with your assigned trustee, so you’ll always be informed and prepared.
What Is a Trustee in Bankruptcy?
A bankruptcy trustee is a private professional approved by the United States Trustee Program to oversee bankruptcy cases. The trustee works toward a just, speedy, and economical resolution of bankruptcy cases.
Also, the trustee serves to prevent abuse and fraud as the “watchdog over the bankruptcy process.”
Despite being appointed by the Program, a component of the Department of Justice, case trustees are not government employees.
The United States Trustee for Region 15, based in San Diego, California, manages the District of Hawaii’s trustees. The District currently has three Chapter 7 Panel Trustees and one Chapter 13 Standing Trustee.
What Does a Bankruptcy Trustee Do?
In a consumer bankruptcy, the trustee’s duties vary depending on which chapter you file. However, in both cases, the trustee will schedule and preside over the 341 meeting of creditors.
During the meeting, the trustee will question you under oath about your debts and assets. They will ensure that you are telling the truth and that you understand the consequences of declaring bankruptcy.
If the trustee suspects you are abusing the bankruptcy process, they can object to your discharge. They also balance the creditors’ interests against your interests as the debtor.
The Chapter 7 Bankruptcy Trustee
In a Chapter 7 liquidation, the trustee will determine if you own any non-exempt assets that you can use to repay creditors.
If so, they will collect them and manage their sale. Then, they will distribute the value to creditors according to the priority rules in the Bankruptcy Code.
The Chapter 7 trustee pays themselves with part of the liquidation profits, usually between 3% and 25%. The trustee won’t receive a fee if there are no assets to sell.
The Chapter 13 Bankruptcy Trustee
In a Chapter 13 bankruptcy, the trustee reviews the repayment plan you submit with your bankruptcy petition.
If they approve of the plan as fair and workable, you will proceed to the bankruptcy court for confirmation. During your three-to-five-year repayment plan, you will send payments to the trustee, who will distribute them to creditors.
Chapter 13 trustee fees are included in the monthly repayment plan and cannot exceed 5% of the total payment.
Contact a Bankruptcy Lawyer Today
When we first mention the concept, many new clients ask, What is a bankruptcy trustee?
The good news is that as experienced bankruptcy attorneys, we know Hawaii’s approved trustees well. We will support you through the 341 meeting and all your interactions with the trustee.
You deserve a speedy and efficient trial, and our experience can help.