A bankruptcy trustee is a type of court-appointed administrator who will manage your estate throughout the bankruptcy process. Because filing for bankruptcy means you assert that you have debt you will not be able to pay with your current or foreseeable income. The trustee will evaluate your income, property, and assets. Their specific actions will vary based on the bankruptcy Chapter under which you file.
When you choose bankruptcy to alleviate insurmountable debt, a Rutherfordton bankruptcy lawyer will explain every step of the process. They will also explain what a trustee in bankruptcy is and their investigation into your income, assets, and debt ratio. The trustee’s role is important, so your lawyer will help you provide them with the information they need.
The U.S. Courts handle all bankruptcy cases and appoint trustees to each individual, business, or corporate filer. Filing for bankruptcy involves multiple rules, forms, and schedules. The trustee’s role is to enforce the role of your bankruptcy Chapter and to investigate your income and debt.
They will review the documents related to your filing, including your bank records and tax returns. The trustee will also assess the viability of your case and make recommendations to the court if they suspect any legal violations of relevant laws.
A bankruptcy lawyer in your area can help you understand and comply with the trustee’s requests for information and avoid any potential missteps that might compromise your filing. Your lawyer will also explain their role regarding your filing Chapter.
What a Chapter 7 Bankruptcy Trustee Investigates
Chapter 7 bankruptcy is for individuals and businesses who have limited finances and assets. In most cases, filers can retain their personal property and assets, including cars and homes while having their qualifying debts discharged.
The trustee will investigate your assets to determine whether you can pass the required means test. If you cannot pass the means test because you have too many assets to qualify, the trustee will recommend filing Chapter 13. They could also recommend dismissal of your case, which would require you to wait 180 days to attempt another filing.
They will examine your petition to the court and look for any assets that were transferred out of your name. The trustee will also review other court records to determine whether you have a previous bankruptcy case and whether it was dismissed.
What a Chapter 11 Bankruptcy Trustee Investigates
Businesses and corporations may choose Chapter 11 bankruptcy to reorganize their debt load and create a payment plan that lets them keep their doors open while repaying debt over time.
According to the U.S. Courts guidelines, the trustee in Chapter 11 filings can actually be the debtor, themselves. They will then act as a debtor in possession and perform many of the duties of a court-appointed trustee, including:
- Accounting for business property
- Examining and objecting to claims
- Submitting required informational reports
A trustee can be appointed by the court in Chapter 11 filings, though this is a rare occurrence. If you serve as your own trustee in this capacity, a bankruptcy lawyer will help you understand and meet your obligations.
What a Chapter 13 Bankruptcy Trustee Investigates
Businesses and individuals file for Chapter 13 bankruptcy when they exceed the income and assets threshold of Chapter 7 or when they cannot pass its means test. Chapter 13 requires a regular source of income and the voluntary reorganization of your debt load.
In Chapter 13 bankruptcy cases, the trustee will:
- Review and investigate the required disclosures
- Examine your schedule and forms in detail
- Investigate any potential areas of fraud
- Determine your ability to repay your debts
- Attend the required meeting of creditors
The trustee will also meet with you and your lawyer to review your overall case. They will confirm or reject specific details about your financial situation and validate the authenticity of bankruptcy paperwork.
An important role of the trustee in your bankruptcy case is to investigate any potential fraud. If they suspect fraud or other irregularities, they will ask you more questions and delve further into your financial situation. They can also request additional supporting documents and challenge your eligibility to seek bankruptcy protection.
If the trustee identifies fraud, they will alert the court and will recommend that your debts not be discharged in your case. They can also file what is called an adversary proceeding that will allow them to question property or asset transfers and seize assets they believe you attempted to hide.
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A trustee in bankruptcy is appointed by the court and can be a certified public accountant (CPA) or lawyer. This appointment by the court does not mean you cannot have your own lawyer to represent you. They can:
- Review your current financial situation before you file
- Determine which bankruptcy Chapter best fits your needs
- Provide clarity on the trustee’s requests and findings
- Review your paperwork before it is submitted to the trustee
- Help you avoid administrative errors or inadvertent omissions
Dealing with the trustee on your own can be daunting and confusing. If you are represented by a bankruptcy lawyer, they can help you get the fresh financial start you need.
If you are seeking the financial fresh start that comes with filing for bankruptcy, our law firm will explain what a trustee in bankruptcy is and what they do in relation to your specific filing.
You do not have to deal with the complex bankruptcy process on your own. Learn more about the bankruptcy process and get help from start to finish by contacting our case review team at Farmer & Morris Law, PLLC today.