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What role does a bankruptcy trustee play?

Many Tennesseans know that bankruptcy is an option when times are tough and they need a fresh financial start. But, few know the mechanics involved, from filing a Chapter 7 or Chapter 13 bankruptcy petition to creating a plan to dispense with debts, or who will oversee the process. One area that is often not well known is the role of a bankruptcy trustee. To learn more about the trustee's role in the process, keep reading.

The first thing to keep in mind is that nearly every consumer bankruptcy will involve a bankruptcy trustee. But, the trustee's powers and obligations will differ, depending on the type of bankruptcy.

Regardless of the type of bankruptcy though, some fundamentals exist. Specifically, a trustee's role is to oversee the bankruptcy estate -- i.e., the debtor's property, which becomes its own distinct legal entity, separate from the debtor, when a person files for divorce.

In the Chapter 13 context, the duty to oversee the bankruptcy estate is limited. For one, in Chapter 13 bankruptcies, a debtor can keep their possessions while the bankruptcy process moves along, so the trustee's main duty falls into four groups. First, the trustee reviews the debtor's repayment plan. Second, the trustee, if necessary, objects to the plan. Third, the trustee collects payments under that plan. And, fourth, the trustee distributes those payments to creditors.

Even though a trustee's role is limited in Chapter 13 bankruptcies, those duties are important. Because of that, Tennesseans who file for divorce can expect the trustee in their case to play a central role.

Tennesseans interested in learning more about whether bankruptcy may be right for them may benefit from discussing their situation with an experienced bankruptcy attorney.

Source: FindLaw.com, "What is a Trustee in Bankruptcy?," accessed on April 25, 2016

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Mark T. Young & Associates
2895 Northpoint Blvd.
Hixson, TN 37343

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