When you decide to hit the reset button on your finances, bankruptcy may help. In gathering insight into the process, you may find that a trustee plays a crucial part during the process from start to finish.
A trustee acts as a neutral eye in the proceeding to get you and your creditors on the same page. The trustee’s authority allows him or her to take control of your bankruptcy estate and make choices to improve your chances of fulfilling the court-ordered terms. Learn what trustees do and how they function in both bankruptcy arrangements.
Who decides on the trustee and when?
When you file for bankruptcy, several actions happen immediately. First, the court puts a blanket stay on creditors to stop further collection efforts, including foreclosures and civil court filings. The judge also appoints the trustee to review your assets, debts and income sources.
What does a trustee do in Chapter 7 bankruptcy?
During a Chapter 7 proceeding, you agree to liquidate some of your assets to repay debts. The trustee gathers all the necessary information to complete a comprehensive valuation of every asset you own. After finishing this, the trustee then compares it with your debts to formulate a plan for liquidation and repayment. A trustee gives priority to secure debts, such as your home.
What is the trustee’s function in Chapter 13?
If you choose a repayment plan under Chapter 13, the trustee negotiates on your behalf. The trustee puts together a plan that allows you to pay back some or all of your debt. Your success in making those monthly payments (for no more than three years) determines if a judge will discharge the remaining debt upon completion.
A trustee wants you to succeed and will try and come up with a solution that meets the requirements of your situation.