Home•The Role of the Bankruptcy Trustee in Chapter 7
The Role of the Bankruptcy Trustee in Chapter 7Darin Swayne2022-10-31T07:19:57+00:00
Bankruptcy Attorney in Pasadena, CA
Filing bankruptcy on your own is always an option, but it is fraught with danger. Finding the right bankruptcy attorney can make all the difference.
Bankruptcy cases are frequently more complicated than meets the eye, and even a single error can be costly. And, if you need legal assistance in a bankruptcy case, you should seek advice from an experienced and trusted bankruptcy law firm rather than a general attorney.
With Daniela Romero as your bankruptcy attorney in Pasadena, California, you are in the right hands. We will guide you through the process step by step, making it simple for you to obtain debt relief in California. Using our wealth of experience, our Pasadena, CA bankruptcy lawyer will file the bankruptcy on your behalf as quickly and efficiently as possible. Fill out our form now to SCHEDULE A PHONE CONSULTATION and take advantage of our bankruptcy services!
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Our bankruptcy attorney is seasoned in the practice of bankruptcy that also helps in filing Chapter 7 and Chapter 13 bankruptcies.
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What is the Role of the Bankruptcy Trustee in Chapter 7?
In a Chapter 7 bankruptcy case, the debtor’s property belongs to the bankruptcy estate unless the court rules that a specific property is no longer the estate’s property, the trustee abandons property to the debtor, or the property is exempt from collection by creditors under California law. It is best to consult with a bankruptcy attorney to determine what property is exempt.
In Chapter 7, a trustee is appointed to take control of the debtor’s assets, bring them into the estate, and sell or distribute them for the benefit of creditors. If some assets are determined to be exempt from distribution to creditors, they will remain with the debtor.
A trustee has the authority to recover previously transferred assets and bring them into the bankruptcy estate. Unless there is an express court order or notice from the trustee, neither the debtor nor any other person or business may use or transfer an asset that belongs to the bankruptcy estate.
Who is a Chapter 7 Bankruptcy Trustee?
They essentially serve as the creditors’ collective representatives. They are also the defender of the bankruptcy system’s integrity.
They are appointed by the United States Trustee, a Department of Justice official who oversees their performance. They do not work for the government.
Primary Duties of a Chapter 7 Bankruptcy Trustee
A bankruptcy trustee has a wide range of duties in the bankruptcy process. The following are their primary duties:
Examining the Bankruptcy Petition and Other Documents
The trustee reviews the debtor’s bankruptcy petition, schedules, and statement of financial affairs. The trustee also analyzes documents of the debtor’s debts, property, and income. The trustee’s job is to use the debtor’s financial documents and other independent sources to verify the debtor’s information and calculations.
Investigating the Debtor
The trustee holds the section 341(a) meeting of creditors approximately 30 days after the bankruptcy case is filed. Although creditors are invited to ask questions during the creditors’ meeting, they rarely do so. The trustee’s job is to lead the meeting and question the debtor about the information in the debtor’s bankruptcy documents.
In Charge of Liquidating Assets
The trustee is in charge of liquidating non-exempt property and distributing the proceeds to creditors following the distribution scheme outlined in the Bankruptcy Code. Non-exempt property can be real estate or personal property, such as a car or a tax refund. The exemption statutes of the state in which the bankruptcy is filed will determine whether the property is exempt or not.
If there are no assets to liquidate, the trustee will file a report stating that the case is a ‘no asset’ case and that no distribution will be made to creditors.
Avoiding Specific Transfers
The trustee can prevent fraudulent or preferential transfers. For example, if a debtor transferred property with the intent to obstruct, delay, or defraud creditors, or if the debtor received no reasonable equivalent value in exchange for the transfer, the trustee may be able to avoid the transfer and recover the fraudulently transferred property for the benefit of creditors. Furthermore, if the debtor paid back certain creditors ahead of others, the trustee may be able to avoid these transfers and recover the money to distribute to creditors.
Objecting to Unworthy Debtors’ Discharge
A bankruptcy discharge is a court order that prohibits creditors from taking legal or other action against the debtor to collect a discharged debt. Trustees may object to a debtor’s discharge being entered if the debtor engages in certain activities, such as fraudulently transferring or concealing property, making a false oath, or failing to obey a lawful court order.
Objecting to Incorrectly Claim Exemptions
Individual bankruptcy debtors may claim certain assets as exempt depending on the state in which they reside. Trustees may not liquidate exempt assets because they are protected from creditors. If a debtor incorrectly claims an asset as exempt, the trustee may object to the exemption claim.
Criminal and IRS Recommendations
Bankruptcy crimes take many forms, and the evidence of those crimes is frequently discovered by trustees while investigating the debtor’s financial affairs. When a trustee discovers potential criminal activity, they refer the matter to the United States Trustee’s office, which then transfers the concern to the local United States Attorney’s Office.
What is the Role of Chapter 7 Bankruptcy Trustee in the Creditor’s Meeting?
A bankruptcy trustee is responsible for several duties during the creditors’ meeting. They are in place to oversee the bankruptcy process and ensure that all paperwork and financials are in order on both the creditor and debtor ends. Aside from routine tasks such as verifying your identity and reviewing your bankruptcy petition for accuracy, the trustee is also responsible for ensuring that your creditors receive the maximum amount of money possible.
Bankruptcy trustees are also vigilant for financial irregularities, such as bankruptcy fraud. They will carefully examine your assets and look for unreported income or revenue streams to obtain more money for your creditors. Furthermore, Chapter 7 trustees will be in charge of selling any unprotected assets and allocating the proceeds to creditors.
Bankruptcy Trustee’s Fee
Trustees are compensated in part by the filing fee paid to the court at the start of the case. Any additional compensation they receive is a fee based on the money they handle as part of the estate. If the estate has no funds at the end of the day, the trustee receives only $60 per case.
Say Yes to Financial Freedom and Be Debt-free Now!
Our experienced bankruptcy lawyers will advise you on protecting yourself best from future financial difficulties. They will also help you how to deal with bankruptcy trustees and guide you through the whole process even before the creditors’ meeting. In Pasadena, we offer free consultations with attorneys specializing in Chapter 7 and Chapter 13 bankruptcies! We can help you on every step, answering any questions or concerns you may have along the way.
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