The function of the Bankruptcy Trustee depends on the nature of the case. In Chapter 7 bankruptcy proceedings, the trustee's primary responsibility is to evaluate the bankruptcy estate. The bankruptcy estate consists of all liquid assets that can be used to settle the debtor's obligations. If there are assets that can be sold, the trustee will supervise their sale and distribute the proceeds evenly among the creditors. If there are no assets that can be converted into cash, the trustee notifies the court and the debtor is released from all obligations. Keep in mind that certain secured creditors may place a lien on your property.
In a Chapter 13 case, the Bankruptcy Trustee plays a slightly different function than in a Chapter 7 case. Chapter 13 does not discharge the debtor from his or her obligations; rather, a three- to five-year repayment plan is established. The trustee is responsible for evaluating your financial situation, verifying the claims of your creditors, and devising a repayment plan that will be acceptable to all parties. In Chapter 13 cases, the debtor is permitted to retain all of their assets, and creditors cannot take further action against them as long as the repayment plan is adhered to.
The bankruptcy hearing is where you will interact with the Bankruptcy Trustee during the bankruptcy procedure. He or she is there to obtain information regarding your obligations, income, and assets from you. During this meeting, you will be administered an oath before being questioned by the trustee.
The Bankruptcy Trustee can be viewed as a kind of mediator. Because he or she collects information from both the debtor and the creditor, verifies their veracity, and determines the most appropriate and equitable method to settle the case. Each state has distinct bankruptcy laws, so it is essential to hire an attorney who specializes in the field.
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