Bankruptcy Trustees – Who Are They?

who is the bankruptcy trustee?

Trustee is the term used for several different roles in the bankruptcy world.  Each has a separate job description.

Chapter 7 trustee

This trustee administers Chapter 7 cases.  His role is to determine whether there are assets to liquidate; to review claims of exemption and the debtor’s entitlement to a discharge.

He is essentially a representative for the creditors as a group.

He is appointed by the United States Trustee, an officer of the Department of Justice, who oversees his performance.  He is not  himself a government employee.

The trustee presides at the first meeting of creditors. He can file objections toclaims of exemption or oppose the debtor’s discharge, but he doesn’t decide those questions.  The judge decides disputed questions.

Trustees are paid in part from the filing fee paid to the court at the commencement of the case.  Any compensation they receive above that is a fee based on the money they handle as part of the estate.  If there are no funds in the estate at the end of the day, the trustee gets only his $60 per case.

Chapter 13 Trustee

The Chapter 13 trustee is also a private individual appointed by the UST.  He serves the same review function as a Chapter 7 trustee (that is, read the schedules and see if the case complies with the Bankruptcy Code and oppose matters that don’t comply with the law.)  He also serves as the disbursing agent for payments made by the debtor into the plan.

Usually, one Chapter 13 trustee serves all the cases in his/her division or district.  The trustee gets a small percentage of the funds that flow through the Chapter 13 case.  That percentage is fixed by the UST after review of the Chapter 13 trustee’s operating expenses.

United States Trustee

This trustee is a government employee whose job it is to appoint and oversee the Chapter 7 and Chapter 13 trustees.  The UST has standing to appear before the court as an interested party.

UST is charged with reviewing Chapter 7 cases for abuse or denial of discharge. Since the ’05 amendments, they appear to be more active in this oversight role and more aggressive in trying to force cases into Chapter 13. They also take an oversight role in Chapter 11 cases, especially where there is no creditors committee.

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About the Author
Northern California bankruptcy lawyer Cathy is a 30+ year veteran of bankruptcy practice in the Silicon Valley. She is known for energetic representation of clients and her command of bankruptcy law.