The Bankruptcy Trustee and His Role

When you file for bankruptcy, you became a bankruptcy trustee. The trustee is the most important person that you will be dealing with while your bankruptcy is ongoing.

He is the person who will be responsible for answering all of your questions once the bankruptcy proceedings are underway. He is the person who takes control of all your non-exempt property and puts it up for auction. And he is the one who communicates with your creditors and pays them from the auction proceedings. And, lastly, the bankruptcy trustee is also the person who ensures that all of the paperwork that you submit to the courts is complete and accurate.

The bankruptcy trustee does have a boss and this is someone called the U.S. Trustee. There are 21 regional U.S. Trustee offices throughout the country. Their goal is to oversee the bankruptcy trustees and ensure that all of the bankruptcy cases that enter the courts are being handled according to the various federal laws. Normally, you as the person filing will have no direct contact with the U.S. Trustee unless there are some illegalities or other unusual circumstances involved.

There is no formal training involved to be assigned as a trustee. But, normally, a bankruptcy trustee comes from the ranks of the local bankruptcy lawyers who knows the bankruptcy laws, even though it is not necessary to be a lawyer to be a bankruptcy trustee. Normally, what happens, is that a few days after you file for bankruptcy, you will get a notice in the mail letting you know who your bankruptcy trustee is. You call him and from that point on, he is in charge.

The interesting thing about bankruptcy trustees is that they are paid indirectly by you. They make their money by taking a percentage of the sales of your non-exempt items that are sold at auction. In theory, this gives him a monetary incentive to get as much as he can for your various items which are good for the creditors who are looking to be paid off. In actuality, however, most of the time they are looking for the quickest sale to avoid having to spend too much time on a particular bankruptcy.

It is important to know that once you file for bankruptcy and are assigned a bankruptcy trustee, all of your nonexempt property is under his control. This means that you cannot sell or get rid of it without his permission. He can take any or all of these items to sell as he pleases. If you violate these terms, it is likely that your bankruptcy case will be dismissed and you will not longer have bankruptcy protection for your exempt items.