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What does a bankruptcy trustee do?

When a Tennessee resident files for bankruptcy, whether under Chapter 7 or 13, one of the first steps in the process is the appointment of a trustee. Who is a trustee? A trustee is a person with no connection to the filer or creditors who is selected or appointed to manage the filer's property and perform other legal duties during the bankruptcy process.

Why is a trustee needed? Upon filing for bankruptcy, a bankruptcy estate, which is made up of the filer's property, is created. This estate is considered a distinct legal entity apart from the person filing for bankruptcy. It needs someone other than the filer to manage it - hence the trustee.

What does a trustee do? It depends. Each situation is different, so each trustee will do different things. But, at a general level, a trustee in a Chapter 7 bankruptcy will do the following:

  • Collect all of the debtor's property
  • Sell off the bankruptcy estate's non-exempt property
  • Challenge, if appropriate, creditor's claims
  • Distribute the proceeds of the property sell off to creditors
  • Object to discharging certain debts via bankruptcy, if there is a good reason for doing so

Meanwhile, in a Chapter 13 bankruptcy, a trustee will often do one or more of the following:

  • Review the filer's proposed repayment plan
  • Object to the plan, if necessary
  • Receive and/or collect the filer's payments made as part of the repayment plan
  • Distribute those payments to creditors

Tennessee residents who want to learn more about bankruptcy and whether it might be the right choice for them may benefit from getting more information about the bankruptcy process.

Source: FindLaw, "What is a Trustee in Bankruptcy?" Accessed Aug. 2, 2016

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

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