What is a Bankruptcy Trustee?
The phrase “bankruptcy trustee” can take on different meanings depending on what type of bankruptcy is concerned.
Consumer bankruptcy cases that apply to ordinary individuals fall into either the Chapter 7 or Chapter 13 category, but usually Chapter 7 bankruptcy. In a Chapter 13 bankruptcy, which is a 3 to 5-year payment plan, the bankruptcy trustee is responsible for taking regular payments out of your paycheck and distributing them to creditors.
However, 95% of people filing bankruptcy in Cleveland do not file Chapter 13 but instead file Chapter 7, a type of bankruptcy that lasts 120 days and results in the elimination of most types of debt.
Chapter 7 Bankruptcy Trustee
A Chapter 7 bankruptcy trustee is essentially a bill collector, but they are a bill collector with a special court-appointed role. The trustee represents your unsecured creditors, meaning credit card companies, medical providers, old landlords, and other people to whom you owe money.
The trustee’s job is to review all of your bankruptcy paperwork, make sure you qualify for bankruptcy and ensure that you do not have any property that is so valuable that it needs to be taken away from you and distributed to creditors.
Generally speaking, it is the Chapter 7 bankruptcy trustee, and not the bankruptcy judge, who we will go in front of if you file a Chapter 7 bankruptcy. This is because there are so many Chapter 7 bankruptcy filings that judges don’t, in my opinion, have time to deal with them all, and the US Congress made a policy decision that said that bankruptcy judges only need to become involved if there is a dispute between the trustee and the person filing bankruptcy.
Is the Bankruptcy Trustee on My Side?
The Chapter 7 bankruptcy trustee is not your enemy, but he or she is certainly not your friend. As I mentioned above, the trustee is a government-appointed bill collector. Not only are they a government-appointed bill collector, but they are also in business for themselves, and paid on commission basis. Like me, they are independent attorneys with their own business, and many of them in addition to serving as bankruptcy trustees also file consumer bankruptcies as part of their business.
The fact that they are paid on commission means that they personally receive a percentage of any property of yours they seize and sell, which gives them an incentive to check details and not play nice. If you think that the bankruptcy trustee is going to go easy on you because you are in a difficult financial position, you are wrong. Your loss is their gain, and they not only have an incentive to take away any of your property that would generate a profit for creditors, but they are also required to do that by the bankruptcy code.
When Will I Meet with a Bankruptcy Trustee?
If you file Chapter 7 bankruptcy through my office, approximately 30 days after we file your case you will go in front of the bankruptcy trustee to testify concerning your case. I will represent you at the hearing. The trustee will ask you tape-recorded questions concerning your income, expenses, debts, property, and any economic activity that has occurred in the last couple of years prior to the filing of your case.
These questions will be a shortened version of the extensive interview I conducted with you during our initial consultation. I know all of the Cleveland-area bankruptcy trustees and their procedures and personalities; I know what makes them angry and what they are willing to ignore.
What to Say to a Bankruptcy Trustee
Prior to the hearing, we will do a practice interview to prepare you for the hearing. I am proud to say that in most cases the hearing is uneventful and even boring. Usually, the trustee satisfies him- or herself that your case is in order and there is nothing of yours that can be taken away, and at that point, they will conclude the hearing and wish you the best of luck in your new, debt-free life.
In order to ensure this is the case though, you may want to meet with an experienced bankruptcy attorney in Cleveland. If you’d like to meet with me for a free consultation either in-person or online, please contact me. I guide all of my clients throughout the bankruptcy process. We will also go over the exact steps to take before meeting with a bankruptcy trustee.
