You’re going to spend 3 to 5 years dealing with your trustee.
To have that happen as smoothly as possible, it helps to understand his or her roles.
Your Chapter 13 bankruptcy trustee can help you have a successful Chapter 13 case. Maybe more importantly, having a good relationship with your trustee and his or her staff increases your odds of success.
The trustee has a number of different roles, some of them somewhat contradictory.
The Gatekeeper of your Bankruptcy Case
Requires you and your attorney to play by the rules—as she or he interprets them—before allowing court-approval of your Chapter 13 Plan.
Payment maximizer to your creditors
Make you pay as much as the law requires to your creditors. In this respect the trustee is the creditors’ advocate in your case.
Creditors’ Disbursal Agent
Receives your money and pays it out exactly as your Plan specifies.
Bankruptcy Plan Overseer
Throughout your case, monitors your Plan payments and other obligations, and raising issues with the bankruptcy court if you’re not complying.
During your case, verifies that you are paying all you can afford, mostly by reviewing your annual tax returns that you must provide. If your income rises significantly in a way not anticipated in your Plan, the trustee can require you to amend your Plan accounting for the increase.
Your bankruptcy helper
In the midst of all this, the trustee is also supposedly required to help you through the Chapter 13 case. The Bankruptcy Code specifically says that the “trustee shall—advise, other than on legal matters, and assist the debtor under the plan.”
Each trustee takes this more or less seriously. So follow your attorney’s lead on how your particular trustee can help. Most trustees do genuinely want you to have a successful Chapter 13 case, and can sometimes be a resource for getting you there.
Here’s a good final word on this, from the website of one of the Chapter 13 trustees:
“The role of the chapter 13 trustee is unique. The trustee does not take into his or her possession or control property of the estate. The trustee does not operate the debtor’s business. Rather, the trustee receives payments from the debtor, and disburses those payments to the debtor’s creditors pursuant to the debtor’s plan. The chapter 13 trustee does, however, counsel with and advise the chapter 13 debtor on all matters relating to the plan other than legal matters. In short, the chapter 13 trustee is an amalgam of social worker and disbursing agent.”
Each trustee balances these roles somewhat differently. But this gives you an idea of the balancing that they must do as they serve you and all their other constituencies.
And frankly, different trustees balance these sometimes contradictory roles differently
Chapter 13 Trustee
Determines if your proposed Chapter 13 Plan meets legal requirements, raises objections, and works with your attorney to adjust your Plan to satisfy any such objections. The trustee or a staff attorney usually presides at your Meeting of Creditors.
You send your Plan payments to the trustee (or a designated collection office), who disburses these funds to your creditors according to the terms of your Plan. The trustee and his or her staff cannot give you legal advice, but will provide you some help in completing your case successfully.
U.S. Bankruptcy Trustee
Is part of the U.S. Department of Justice, overseen by the U.S. Attorney General. The U.S. Trustee (“UST”) appoints and supervises the group (“panel”) of Chapter 7 trustees and the “standing” Chapter 13 trustees.
Each regional UST, through a staff usually including an attorney and/or accountants, monitors the administration of bankruptcy cases, most closely with Chapter 11 business cases.
They are most often involved in consumer cases in raising objections to the eligibility of debtors to file Chapter 7 cases. In rare cases, they can refer potential bankruptcy crimes to the U.S. Attorney for investigation and prosecution.
Again, in my next blogs I’ll tell you more about each one of these trustees, especially how to avoid worrying about them by taking the right steps in your bankruptcy case.