As the U.S. Department of Justice notes, the Bankruptcy Reform Act of 1978 established the U.S. Trustee Program, which is intended to protect the integrity of the bankruptcy process. Through taking charge of the debtor’s bankruptcy estate in a Chapter 7 filing, the trustee commits to doing the following when it is applicable:
- Selling the property in the estate
- Giving creditors the proceeds of the sale
- Objecting to a claim a creditor has made
- Challenging a bankruptcy discharge
A trustee’s role in a Chapter 13 case is slightly different because a debtor develops a repayment plan instead of selling off assets. Therefore, the trustee is tasked with reviewing the plan and objecting to certain components if necessary. Once the plan is finalized, the trustee must collect payments from the debtor and distribute those to creditors.
The trustee plays an integral role in individual bankruptcy filings, and he or she may also oversee reorganization proceedings in a Chapter 11 business filing. There is no trustee automatically appointed to these cases, but a debtor can choose to have one. The person will perform tasks such as holding the meeting of creditors, monitor the debtor’s finances, approve reorganization plans and monitor professionals associated with the case.
While this information may be useful, it should not be taken as legal advice.