What is a Trustee? What is a Bankruptcy Trustee? Do I Need a Lawyer if I Have a Trustee?

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What is a Trustee? What is a Bankruptcy Trustee? Do I Need a Lawyer if I Have a Trustee?

I have recently noticed that the concept of a bankruptcy trustee is foreign to many of my clients. This makes sense, given that most have zero prior experience with the bankruptcy court system. In a nutshell, a trustee is the court appointed official who administers the debtor's bankruptcy estate.

A Chapter 7 trustee liquidates non exempt property and distributes it according to the scheme of priorities in the Code; the trustee also considers whether there are preferences or fraudulent transfers that can be recovered from which creditors can be paid. The trustee may bring a motion to dismiss the case as an abuse of the bankruptcy system or to deny the debtor a discharge if the trustee finds evidence of fraud, perjury, or ineligibility.

A Chapter 13 trustee reviews the debtor's plan and collects and distributes payments made by the Chapter 13 debtor. They are responsible for the management of your funds throughout the duration of you plan, which remember can be 3-5 years in duration.

An important point to clarify is the relationship that you will have with the trustee. If you hire a bankruptcy lawyer to prepare and file your petition, you will likely have limited contact with your case trustee. Prior to your 341 hearing, you will likely be asked by the trustee for a series of documents similar to those you provided to your attorney (which is why I ask clients to make three copies of all documents required in bankruptcy: 1 for me, 1 for the trustee and 1 backup). At the 341 hearing, you are required to appear before your trustee to answer a series of questions regarding your case. Other than these instances, your interactions with the bankruptcy trustee will be minimal.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Christopher Ariano, Ariano and Associates, PLLC | Attorney Advertising

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