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What is a bankruptcy trustee

What is a bankruptcy trustee and what do they do?

What is a bankruptcy trustee and what do they do?

What is a bankruptcy trustee and what do they do?

What is a bankruptcy trustee and what do they do?

A bankruptcy trustee is appointed by the bankruptcy court to oversee the bankruptcy case and represent the interests of the bankruptcy estate. Some of the main functions of a bankruptcy trustee include:

Administering the bankruptcy estate – This involves identifying, collecting and liquidating any nonexempt assets of the debtor to pay creditors. The trustee is responsible for selling property, pursuing legal claims on behalf of the estate, objecting to improper claims, and more.

Distributing payments to creditors – The trustee collects payments from the debtor and distributes them to creditors according to the terms of the bankruptcy plan. Secured creditors get paid first, then priority unsecured creditors, and finally general unsecured creditors.

Reviewing the debtor’s petition and schedules – The trustee reviews the documents filed by the debtor to ensure they are accurate and complete. The trustee may investigate any questionable or suspicious activity.

Examining the debtor at the meeting of creditors – The trustee questions the debtor under oath about their financial affairs and may ask for documents. Creditors can also ask questions at this meeting.

Filing reports with the court – The trustee is required to file reports with the bankruptcy court about the administration of the estate and the status of assets, claims, receipts and disbursements.

Objecting to the debtor’s discharge – If there are grounds to do so, the trustee may object to the court granting the debtor a discharge which cancels eligible debts.

Making recommendations to the court – The trustee may make recommendations regarding the confirmation of a bankruptcy plan, sale of assets, avoidance of liens, and other matters that require court approval.

So in essence, the bankruptcy trustee works on behalf of the court and all creditors to ensure the bankruptcy laws are followed and the estate is properly administered. They play a watchdog role over the debtor.

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Estate Planning Attorney Eric Ridley