Bankruptcy Trustee FAQ

What is a Bankruptcy Trustee?

In all chapter 7, 12, 13 and in some chapter 11 cases, a case trustee is assigned. In chapter 7 cases they are called Panel Trustees. In chapter 12 and 13 cases they are called Standing Trustees. The trustee`s job is to administer the bankruptcy estate, to make sure creditors get as much money as possible, and to run the first meeting of creditors, (also called the 341 meeting, because 11 U.S.C. Section 341 of the Bankruptcy Code requires that the meeting be held). The trustee either collects and sells non­exempt estate property, as in the case of a chapter 7, or collects and pays out money on a repayment plan, as in the case of a chapter 13. The trustee can require that you provide, under penalty of perjury, information and documents, either before, after, or at the meeting.

You should always cooperate with the trustee, since failure to cooperate with the trustee could be grounds to have your discharge denied. Trustees do not have to be lawyers. The court does not pay trustees. 

Who is the United State Trustee?

The United States Trustee appoints the trustees. The trustees report to the court, but their fees come out of the bankruptcy filing fees or as a percentage of the money distributed to creditors in the bankruptcy. The United States Trustee`s Office is part of the U.S. Department of Justice, and is separate from the court. The United States Trustee`s Office is a watchdog agency, charged with monitoring all bankruptcies, appointing and supervising all trustees, and identifying fraud in bankruptcy cases.

The United States Trustee`s Office cannot give you legal advice, but they can give you information about the status of a case, and you can contact them if you are having a problem with a trustee, or if you have evidence of any fraudulent activity. In monitoring cases, the United States Trustee reviews all bankruptcy petitions and pleadings filed in cases, and participate in many proceedings affecting the case. However, they do not administer the case themselves. They can bring motions in the bankruptcy, such as ones to dismiss the case, or to deny the debtor`s discharge.

What is the creditor's meeting in a bankruptcy proceeding?

A meeting of creditors is the single hearing all debtors must attend in any bankruptcy proceeding. It is held outside the presence of the judge and usually occurs between twenty (20) and forty (40) days from the date the original petition is filed with the court.

In chapter 7, chapter 12, and chapter 13 cases, the trustee assigned by the court on behalf of the United States Trustee conducts the hearing. In chapter 11 cases where the debtor is in possession and no trustee is assigned, a representative of the United States Trustee`s office conducts the hearing.

The hearing permits the trustee or representative of the United States Trustee`s Office to review the debtor`s petition and schedules with the debtor face­to­face. The debtor is required to answer questions under penalty of perjury concerning the debtor`s acts, conduct, property, liabilities, financial condition and any matter that may affect administration of the estate or the debtor`s right to discharge. This information enables the trustee or representative of the United States trustee`s Office to understand the debtor`s circumstances and facilitates efficient administration of the case.

Additionally, the trustee or representative of the United States Trustee`s Office will ask questions to ensure that the debtor understand the positive and negative aspects of filing for bankruptcy. The hearing is referred to as the meeting of creditors because creditors are notified that they may attend and question the debtor about the location and disposition of assets and any other matter relevant to the administration of the case. However, creditors need not attend these hearings and, in general, are not considered to have waived any of their rights by failing to appear. 

The hearing usually lasts only a few minutes and may be continued if the trustee or representative of the United States Trustee`s Office is not satisfied with the information provided by the debtor. The trustee or representative of the United States Trustee`s Office may request that the bankruptcy case be dismissed if the debtor fails to appear and provide the information requested at the hearing. The United States Trustee may also request that the debtor be ordered by the court to cooperate or be held in contempt of court for failing to cooperate.

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