When you file for Chapter 13 bankruptcy, a bankruptcy trustee will be assigned to your case. The Chapter 13 trustee is responsible for administering your case.
Read on to learn the duties of the Chapter 13 trustee, how the trustee gets paid, the active role the trustee may play in your case, and more. (To learn about Chapter 13 bankruptcy, see our Chapter 13 Bankruptcy area.)
In a Chapter 13 bankruptcy, the trustee’s role is to:
Chapter 13 trustees pay themselves by keeping 7%–10% of the payments they disburse to creditors.
Many Chapter 13 trustees play a fairly active role in the cases they administer. This is especially true in small suburban or rural judicial districts, or in districts with a lot of Chapter 13 bankruptcy cases. For example, a trustee may:
Despite the trustee’s great interest in your finances, your financial relationship with the trustee is not as stifling as it may sound. In most situations, you keep complete control over money and property you acquire after filing—as long as you make the payments called for under your repayment plan and you make all regular payments on your secured debts. However, if your income or property increases during the life of your plan (for instance, you receive a substantial promotion or you win the lottery), the trustee can seek to amend your plan to pay your creditors a greater percentage of what you owe them rather than the lesser percentage originally called for in your plan.
Excerpted from The New Bankruptcy: Will It Work for You?, by Attorney Stephen Elias (Nolo).