Until your bankruptcy case ends, your financial assets and problems are in the hands of the bankruptcy trustee, who acts under the supervision of another type of trustee called the U.S. Trustee.
Read on to learn the difference between these two types of trustees, and what each trustee’s role is in your bankruptcy case.
The bankruptcy trustee may be a local bankruptcy attorney or a nonlawyer who is very knowledgeable about Chapter 7 or Chapter 13 bankruptcy generally and the local court’s rules and procedures in particular.
Just a few days after you file your bankruptcy papers, you’ll get a Notice of Filing from the court, giving the name, business address, and business phone number of the bankruptcy trustee.
The Duties of the Bankruptcy Trustee
With few exceptions, the bankruptcy trustee assumes legal control of your property and debts as of the date you file. If, without the trustee’s consent, you sell or give away property while your case is open, you risk having the transaction undone and your case dismissed.
The bankruptcy trustee’s primary duties are:
The goals and duties of the bankruptcy vary slightly depending on whether you are filing for Chapter 7 or Chapter 13 bankruptcy. To learn about the role of the trustee under the different bankruptcy chapters, see Duties of the Chapter 7 Bankruptcy Trustee and Duties of the Chapter 13 Bankruptcy Trustee.
Once you file your bankruptcy petition, your trustee may contact you with a list of any financial documents the trustee wants to see, such as bank statements, property appraisals, or canceled checks, and the date by which the trustee wants them. In addition, you are supposed to send the trustee a copy of your most recently filed federal tax return at least seven days before the creditors’ meeting.
In addition to the bankruptcy trustee assigned to your case, another type of trustee—a U.S. Trustee—will be involved, usually behind the scenes. The Office of the U.S. Trustee is a part of the United States Department of Justice. Its role is to supervise the bankruptcy trustees who actually handle cases in the bankruptcy court, to make sure that the bankruptcy laws are being followed and that cases of fraud and other crimes are appropriately handled. There are 21 regional U.S. Trustee offices throughout the country.
If a U.S. Trustee decides to take an active part in your case, the parties to the case—including you—will be sent a notice about the proposed action, and you will be given an opportunity to oppose whatever action the U.S. Trustee proposes.
Happily, most filers never have to deal with the U.S. Trustee. It will likely happen only if they file a Chapter 7 bankruptcy and their bankruptcy papers—or their testimony at the creditors’ meeting—indicate that:
Excerpted from The New Bankruptcy: Will It Work for You?, by Attorney Stephen Elias (Nolo).