Bankruptcy trustees are an important part of the bankruptcy process which is why filing parties should ensure all their questions about the role of the bankruptcy trustee are answered. Bankruptcy trustees are involved in both the Chapter 7 and Chapter 13 bankruptcy processes, though their roles may differ depending on the type of bankruptcy protection the filing party has filed for.
In a Chapter 7 liquidation bankruptcy, the role and responsibilities of the bankruptcy trustee include being tasked with collecting all the filing party’s property; selling the bankruptcy estate’s property; challenging creditor claims when necessary; distributing proceeds from the bankruptcy liquidation process to the creditors; and objecting to a bankruptcy discharge at the end of the bankruptcy process if a valid reason to challenge the discharge exists.
Alternately, during a Chapter 13 bankruptcy, because the filing party maintains possession of the property, the bankruptcy trustee’s role is primarily handling payments to creditors as part of the repayment plan process. The role of a bankruptcy trustee during the Chapter 13 bankruptcy includes reviewing the debtor’s proposed repayment plan; making any needed objections to the repayment plan; receiving and collecting payments from the filing party pursuant to the repayment plan; and distributing payments to the creditors.
Chapter 7 and Chapter 13 personal bankruptcy options both provide important protections to consumers struggling with overwhelming debt and faced with the concerns and stresses that accompany it. It is helpful for those considering filing for bankruptcy to be familiar with the different bankruptcy protections so they can determine which option is best for their goals and needs.