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Is A Trustee Required In Every Bankruptcy Case?

Nov. 28, 2018

Bankruptcy trustees are appointed in practically every individual consumer bankruptcy case. Depending on the case, the trustee will have a variety of obligations and powers. What’s more, the trustee may be an attorney but does not have to be. In fact, many trustees are accountants, probably because their skill set is well suited to handling their duties.

Although the trustee is appointed by the court, the office of the United States trustee — which is a branch of the Department of Justice — actually oversees their performance.

One important note about debtors who are filing for Chapter 13 bankruptcy: with this option, the debtor keeps possession of their property during the course of the bankruptcy. Because the debtor retains possession, the trustee’s primary duties involve handling payments. In addition, these duties differ depending on the circumstances of the case, including details relating to the particular debtor and the different creditors. Because duties vary based on the particulars, a trustee’s duties may involve some of items listed below but not necessarily all of them. These duties can include:

  • Reviewing the debtor’s proposed repayment plan.

  • Verifying the debtor’s income and expenses, making sure the expenses are what we call necessary and reasonable. If your expenses are too high, they might challenge that.

  • Collecting monthly payments and distributing those monthly payments to the creditors based on the plan of reorganization.

  • Making and filing objections to the plan if there’s something not right about it. If there’s an issue they object to, you’ll have to fix it before you can get the plan confirmed by the judge.

This list of duties indicates just how important the trustee is in most consumer bankruptcy cases. That’s why it’s good advice to try and establish and maintain good relations with a trustee. If you think a trustee is wrong about a certain issue, you can challenge their decision, and a judge can rule in your favor. But, as with any business relationship, it’s best to sort things out personally instead of dragging challenges before a judge.

This is where we can help our clients at length. We have experience with the trustees working in Los Angeles County and know them personally. We know how they like to work and the processes they follow. If you’re considering Chapter 13 bankruptcy, give us a call. We can give you more information about the trustee role, along with all of your other options going forward.