Bankruptcy is a great way to get rid of a huge amount of debts. People can file under chapter 7 or chapter 13. When any individual files for bankruptcy under chapter 7, a trustee is appointed by the court to oversee the proceedings of the case. According to Los Angeles based bankruptcy law firm Recovery Law Group, the bankruptcy trustee has various responsibilities including evaluating paperwork, selling of non-exempt property, etc.
What does a trustee do?
The bankruptcy trustee is appointed by the court as an independent evaluator for the case. The trustee gets paid to examine your bankruptcy papers and gets a percentage of any assets sold during the process. This is an incentive to perform their duty carefully. They need to carefully assess the property of the bankruptcy filer including any that were transferred or sold prior to a bankruptcy filing. The trustee must be fair in their dealings towards the debtor. The main duties of a bankruptcy trustee in the case of chapter 7 include:
- Reviewing bankruptcy petition
When an individual files for bankruptcy, they are expected to provide personal and financial information including their property, income, debts and other financial details. You also need to provide information justifying your claims including tax return, pay stubs and any information about your assets. The trustee needs to verify the information with independent sources as well as from the financial documents you provided. Both figures should match for a bankruptcy petition to be approved.
- Examining the documents
A 341 meeting of creditors takes place after one month of filing bankruptcy papers. This is attended by the bankruptcy trustee, debtor, his/her attorney and the creditors. In case the creditors have any questions regarding any hidden assets they might ask during this meeting. The bankruptcy trustee conducts the hearing and asks questions pertaining to the information provided by you in your bankruptcy documents. All this takes place under oath; lying would mean perjury which might result in your case being dismissed without a discharge.
- Selling of non-exempt property
The bankruptcy trustee is also responsible for selling any non-exempt assets the proceeds of which are used to pay your creditors. Chapter 7 allows debtors to keep certain property like retirement accounts, household furnishings, clothing, etc. An individual can choose from federal or state bankruptcy exemptions.
- The debtor has non-exempt property–In case you have non-exempt property, it is sold, and the amount is distributed among creditors. You need to determine what happens to your property before filing for bankruptcy as you do not have automatic right to dismiss your case.
- The debtor has no non-exempt property–In case there is no non-exempt property, creditors are not paid anything, the case is reported as “no asset” case and all unsecured debts are discharged. If any disagreement arises on exemption status of any asset between debtor and trustee, the final decision is of a bankruptcy
- Reversing dubious transfer of property
The bankruptcy trustee can overturn any preferential transfers or improper sale of any asset made before bankruptcy filing. If you transferred property to a family member or friend or paid any creditor preferably over others, then such transactions are undone by the trustee. The money reversed is distributed among all creditors. In case a creditor did not create a proper lien on your property, this can also be reversed by the trustee, and the property can be sold free and clear of the lien.
If you are contemplating bankruptcy, call at 888-297-6023 to find out more about the process.