Role of The Bankruptcy Trustee
Our Montgomery bankruptcy attorneys are asked what is the purpose of the bankruptcy trustee. To understand the role of the trustee you must first understand the larger picture of the bankruptcy court. First it is always our goal to work closely with the trustee to make sure that you receive the proper discharge of all of your debts. Alabama is different than most states in that we have our own trustee program and bankruptcy administrator. Most states are part of the US Trustee program which is administered through the Department of Justice. Alabama is one of only two states that opted out of this program. Also, there is only one available trustee to be assigned to Chapter 13 cases, yet there are multiple available, private trustees assigned to Chapter 7 cases.
In Alabama the Bankruptcy Administrator supervises the work of the trustees. This in no way minimizes the work that the private trustees do. The private trustee makes sure that the case assigned to their office moves forward in a smooth manner, and the trustees also make sure that creditors are paid back to the fullest extent possible to this extent. Each client must understand that one of the roles of the trustee is to collect money from the debtor and pay it back to their creditors. The trustee is trying to collect every dollar possible from that debtor for the benefit of the creditor!
The role of the Chapter 7 bankruptcy trustee is quite different than the role of the Chapter 13 trustee. When we file a petition on behalf of a client in a Chapter 7, the filing of the petition creates a “bankruptcy estate.” The role of the Chapter 7 trustee in this bankruptcy estate is to liquidate any assets that are non-exempt in order to pay the money to the unsecured creditors. In Alabama If all of your assets are exempt, then the bankruptcy trustee will file a statement that there will be no distribution of any money in the bankruptcy estate to any unsecured creditors; however if you do have as assets that are not exempt then the trustee will try to sell these assets, and the proceeds will be used to pay to the unsecured creditors that have filed claims with the bankruptcy court. These creditors must have filed a Proof of Claim with the bankruptcy court in order to be paid. If a creditor does not file the Proof of Claim in a timely manner that that creditor will not receive any funds from the estate, but will be discharged at the close of the Chapter 7 case.
The role of the Chapter 13 bankruptcy trustee is much different. In a Chapter 13 debt consolidation case, when we file the petition a trustee is automatically assigned to the case. Since the client has a Chapter 13 debt consolidation repayment plan, there will be a weekly, bi-weekly, semi-monthly, or monthly payments made to the bankruptcy trustee. The bankruptcy trustee is then responsible for collecting the money that you pay and distributing it to your creditors. Depending on which plan is filed in your case, this will occur over the life of the plan which is 3 to 5 years. The Chapter 13 Trustee also monitors the debtor’s payments to make sure that payments are being made timely. If payments are not being made timely, then the Chapter 13 will request that the judge in your case dismiss your bankruptcy; however, our Montgomery bankruptcy lawyers zealously fight on your behalf to keep your bankruptcy alive! Furthermore, the Chapter 13 Trustee will keep the Bankruptcy Administrator apprised of the status of all cases that is being administered by the trustee’s office.
At The Sellers Law Firm, we are always available to explain any part of the bankruptcy process. All consultations are always free! Our Montgomery bankruptcy attorneys can normally see a new client within 24 hours. We may be reached by calling 334-LAWYERS (529-9377) or by using the “text us” link or Contact Form on our website. Remember that doing nothing changes nothing so act today!
The Sellers Law Firm is designated a debt relief agency by an Act of Congress and the President of the United States. We have proudly assisted people seeking relief under the U.S. Bankruptcy Code for three decades.