Chapter 13 bankruptcy trustee
Trustee is a term used in legal parlance as a man or woman who is authorized by the legal establishment to manage money, property or assets whose owner is another person.The role of a trustee in the bankruptcy process in the United states is very important and he has a specified role. The trustee is the fulcrum around which a bankruptcy case filed by a debtor for bankruptcy revolves.
The banking act of 1978 and amended as late as 2005 has clearly defined roles for a trustee. In America there can be no bankruptcy proceedings without a trustee. In fact a point at issue in legal parlance is that a debtor filing for discharge from his debts in a bankruptcy court cannot get a discharge in case there is no Trustee. A trustee is appointed under authority of the United States Courts and draws his powers from acts passed by Congress.His powers are also clearly defined and delinated.
The role of a trustee is of paramount importance as per Chaptor 7 and chapter 13 of the Bankruptcy Act. All cases filed under chapter 7 which is a straight forward bankruptcy come under the purview of the bankruptcy trustee. The bankruptcy trustee is the person who administers all cases filed under chapter 7 of the act. The bankruptcy trustee has a clear and defined role. He is the man /woman who has to establish whether a debtor filing for bankruptcy under chapter 7 has any assets to sell or settle to pay off the debts. The bankruptcy Trustee also has an additional task to review claims of exemption and the debtor's entitlement to a discharge. It must be borne in mind that the trustee is generally represents the interests of the creditors.he is the creditors representative. Thus he has to be extra diligent to ensure that the creditors get their due. He is essentially a representative for the creditors as a group.
However the bankruptcy trustees role is slightly different in a chapter 13 case filing, compared to his role in a chapter 7 bankruptcy filing. Under chapter 13 the trustee is also a private individual appointed by the United States Trustee. He serves the same review function as a Chapter 7 trustee (that is, read the schedules and sees if the case complies with the Bankruptcy Code and oppose matters that don't comply with the law.) He also serves as the disbursing agent for payments made by the debtor into the plan. Usually a single Chapter 13 trustee serves all the cases in his/her division or district. Its an onerous task and a chapter 13 trustee will usually have his hands full. The trustee gets a small percentage of the funds that flow through the Chapter 13 case as his remuneration. That percentage is fixed by the UST after review of the Chapter 13 trustee's operating expenses. A major role of the chapter trustee under Chapter 13 is to review the debtor's plan of repayment. He also collects and distributes all payments made by the Chapter 13 debtor to the creditors.
A bankruptcy trustee draws his powers from the United States constitution and the act as enacted by Congress. He is appointed by the United States Trustee who is an officer of the United States department of justice. The United States trustee not only appoints the bankruptcy trustee but also reviews his performance at periodical intervals. Complaints if any against the bankruptcy trustee are attended by the US trustee. The bankruptcy trustee is not an official of the United States government or a government employee. He is generally an eminent person or a practicing lawyer or accountant.
The first meeting of the creditors with the debtor is presided over by the bankruptcy trustee. He has power to file objections to any claims of exemption that may be put forward by the debtor or oppose the debtor's discharge. These questions are however not decided by him which is the prerogative of the judge hearing the case.
Another role of the trustee under chapter 13 is to evaluate whether there have any fraudulent transfers that can be recovered from which creditors can be paid. The trustee may bring a motion to dismiss the case as an abuse of the bankruptcy system or to deny the debtor a discharge if the trustee finds evidence of fraud, perjury etc. Trustees draw their compensation from the filing fee paid to the court at the commencement of the case. Any compensation they receive above that is a fee based on the money they handle as part of the estate. If there are no funds in the estate at the end of the day, the trustee gets only his $60 per case.
Lastly a word about the United States trustee wont be amiss. The United States Trustee is an employee of the United States Government. He works under the authority of the United States Supreme court. He has the onerous task of appointing and overseeing the work of the trustees under Chapter 7 and Chapter 13 cases. The United States Trustee has a standing brief to appear before the court as an interested party at any time during the hearing. He has over riding judicial powers powers. In addition the UST is also empowered to review Chapter 7 cases which concern abuse of the judicial process or in case there is a denial of discharge to the debtor for any reason. The '05 amendments have given the US trustee a more active role in the bankruptcy process. The US trustee also takes an oversight role in chapter 11 cases, especially where there is no creditors committee. The role of Bankruptcy trustees in chapter 13 bankruptcy proceedings cannot be underestimated. Lastly a bankruptcy trustee has to be fair in his dealings with both the creditors and the debtor.
Other Articles
