Do you know what the Bankruptcy Trustee does ?
A typical Chapter 7 and Chapter 13 bankruptcy case involves three entities: the debtor (and his or her attorney), the creditors, and the trustee. This article will examine the pivotal role that the trustee plays in bankruptcy proceedings.
As a bankruptcy lawyer in Walnut Creek, I am knowledgeable about the filing process. When people file for bankruptcy, they must turn over all their non-exempt property to the bankruptcy court. That's the bad news. The good news is that this transaction includes turning over all dischargeable debts as well. When this happens the trustee then becomes the legal custodian of the debtor's property until the petition is approved or denied and the case is settled.
As custodian, the trustee's main job is to look for assets amongst the debtor's property to sell for the benefit of the creditors. Thus, contrary to the role of a judge in a civil action or criminal case, the trustee is not really an impartial arbiter. He or she will be eager to squeeze all possible value out the debtor's non-exempt property. The reason for this is two-fold. First, basic fairness requires that, in exchange for releasing debtors from the obligations they incurred, they turn over all their non-exempt property to the creditors. Second, the trustee receives a certain percentage of all assets sold for the benefit of the creditors. Because of this potential commission, the trustee will undoubtedly keep a keen eye out for salable property in the debtor's estate.
The Importance of Having a Bankruptcy Lawyer on Your Side
However, the trustee can only lay his or her hands on non-exempt property. Therefore, it is highly recommended that debtors consult a qualified attorney in order to maximize the amount of property they are able to retain by taking full advantage of the exemption provisions in the bankruptcy code. As a bankruptcy attorney I am familiar with the ways in which with debtors can free themselves from oppressive debt while still holding on to cherished possessions and essential goods. I have offices in Sacramento, Fairfield, and Walnut Creek and offer free consultations to those considering filing for bankruptcy.
Once a petition for bankruptcy is filed, the debtor must attend a meeting of the creditors. This is referred to as a 341 meeting. The trustee is in charge of this meeting and will typically ask the debtor questions pertaining to how his or her bankruptcy came about. In addition, the trustee might inquire about the methodology by which the debtor assigned a value to a particular piece of property. I'll talk more about the 341 Meeting in an article later this week.
