Role of Trustee in Chapter 7 Bankruptcy

Chapter 7 bankruptcy and the role of the Trustee

In a Chapter 7 bankruptcy, the trustee collects property and liquidates it.  That means that they convert property to cash.  Then, the trustee distributes this money to creditors.  (This is why a Chapter 7 bankruptcy is sometimes referred to as a liquidation bankruptcy).

You are allowed to exclude some property from the process of liquidation when you file bankruptcy.  Consult with your attorney who is experienced in Chapter 7 bankruptcy to understand these exclusions.  Excluding property will not be touched in your bankruptcy.

There is property that you can exempt when filing bankruptcy.  These exempt properties have some limitations, but typically include clothing, home, car, and furniture.  A trustee can object to any exemptions that you are claiming.

A trustee may also object to your discharge.  A discharge is received at the end of the bankruptcy case, meaning that you are no longer responsible for the debts outlined in the paperwork.  The trustee must send notices to a person receiving spousal support or alimony regarding their rights.

Next, because many people who file Chapter 7 bankruptcy will keep the majority of their property, the main obligation of the trustee is to review the file.  In reviewing the case, the trustee looks at the exemption claims and schedules prepared by yourself and your attorney.  The trustee assigned to your case will ensure that you will follow through with the stipulations of the Chapter 7 bankruptcy.

Finally, the trustee makes an accounting report of your case and submits it to the United States bankruptcy trustee.

Obviously, it is helpful that you hire an attorney who knows the Chapter 7 and Chapter 13 bankruptcy law, who knows the Arizona Bankruptcy procedures and proceedings, and who knows the Arizona trustees. 

Phoenix Bankruptcy Lawyers know the Arizona Bankruptcy Law, the Bankruptcy Process, and the Arizona Trustees

A hearing called a meeting of creditors takes place in a Chapter 7 and Chapter 13 bankruptcy.  In this meeting, the trustee is in charge.  What takes place at the meeting of creditors?  Referring to your case, the trustee reviews documents and may ask you questions they have about your bankruptcy.  At this hearing a trustee can determine whether to claim your filing was improper, or to decide to object to your discharge.

What is your relationship with the bankruptcy trustee? 

You should cooperate with the trustee.  As the debtor, you cannot block the trustee’s work.  However, if the trustee makes a request that seems unreasonably difficult to comply with, or that would require you to spend a lot of money or time to comply with, you should have a discussion with your attorney.