The trustee is a lawyer, often in private practice himself, but acting in the capacity of a bankruptcy trustee he is vested with certain statutory powers and acts on behalf of the bankruptcy estate (largely for the benefit of the unsecured creditors as a group).
The trustee assumes legal control over all of the debtor’s property, which is referred to as “property of the estate.” The trustee, as the representative of your bankruptcy estate generally succeeds to all your property interests. In most cases, debtors are unaware of this fact since they normally remain in possession of their property during the administration of the case and their property legally revests when the case is closed, or upon confirmation of a plan in chapter 13. However, it is important to note that while a bankruptcy case is pending a debtor has no authority, absent the trustee’s consent or court approval, to sell or give away any assets;
The trustee’s role varies somewhat depending whether the case is a chapter 7 or chapter 13.
In general, the Trustee:
** Makes certain that the Bankruptcy Laws are complied with;
** Makes certain that all property interests have been fully disclosed;
** Makes certain that all liabilities (debts) have been fully disclosed;
** Makes certain that any pre-bankruptcy transfers have been fully disclosed;
** Presides over the 341 Meeting of Creditors;
** Questions the Debtor at the 341 Meeting of Creditors;
** Reviews the various schedules and statements filed in the case;
** Advises the Debtors of their responsibilities in order to obtain a discharge;
** Investigates public sources of information to verify the accuracy of the schedules;
** Assumes legal control over all of the Debtor’s property;
** Objects to the Debtor’s exemptions should he believe they are improper;
In Chapter 7 Cases, the Trustee:
** May seek to sell property of the estate;
** Stand in a Debtors shoes and settle any pending or potential lawsuits (subject to Court approval);
** May seek to recover preferential transfers and payments, from third parties;
** May seek to recover fraudulent transfers;
** May seek to collect rents on property you may own, but rent out;
** May seek to recover unauthorized post-petition transfers;
** May seek to deny a Debtor’s discharge;
** Distributes any funds realized during his administration of the Estate according to the priorities set forth in the Bankruptcy Code;
** May seek to revoke a discharge in appropriate circumstances.
In Chapter 13 Cases, the Trustee:
** Reviews your proposed chapter 13 plan;
** Seeks confirmation of the Debtor’s proposed plan, if it meets the requirements for confirmation;
** Reviews the Debtor’s budget to make certain the plan is feasible (i.e., it appears that the Debtor can make the proposed plan payments).
** Acts as a disbursing agent. He receives the Debtor’s payments each month and disburses the payments according to the terms of the Debtor Chapter 13 Plan.
** Continues to monitor the case to make certain payments are being made;
** Monitors the case to make certain the plan remains feasible;
** Takes positions on any motions that the Debtor or other parties in interest may file.
** Files a Final Report after all payments have been made and disbursed.