Overwhelming debt can come from many sources such as major illness, job loss, or emergency home repairs, to name just a few. What all of these situations have in common is the reality that these expenses can quickly leave a person with more bills than he or she can ever hope to pay. Financial difficulties are a significant source of stress for many Americans, and some turn to bankruptcy to find relief from these pressures.
Several types of bankruptcy exist to address the needs of different types of debtors, but Chapter 7 is the one most often used by individuals and married couples to obtain debt relief. Chapter 7 is a liquidation process, meaning any property that is not exempt from the bankruptcy process can be seized and sold to pay off creditors. In addition to the debtor and his or her attorney, the other two key players in a bankruptcy are the judge and the trustee. The trustee is appointed by the court and performs a lot of the groundwork that relates to overseeing the bankruptcy case, including evaluating and distributing property sale proceeds. Given the role and authority this individual has in the bankruptcy process, debtors need to understand the purpose of the trustee, and the trustee’s impact on a bankruptcy case.
Trustee Administrative Duties
Trustees are impartially-appointed representatives that appear in every Chapter 7 bankruptcy case. Essentially, the trustee is charged with administering each case and liquidating non-exempt assets, if available, but there are many steps that comprise the trustee’s oversight. At the beginning of a bankruptcy case, the trustee is responsible for reviewing and verifying the petition and the financial documents submitted by the debtor. In addition to information related to a debtor’s income, property and debts, supporting documentation must be submitted directly to the trustee, such as pay stubs and tax returns. The trustee uses this information to ensure the debtor’s calculations are accurate and qualify him or her for Chapter 7 bankruptcy.
The trustee is next involved at the meeting of creditors, a key event in all bankruptcy cases. This is the first and probably only time a debtor will meet the trustee in person. The hearing occurs fairly early in the bankruptcy process, about one month from the date of filing, and allows creditors to attend and ask the debtor questions. Practically speaking, unless creditors suspect a debtor is hiding assets, few, if any, attend. The trustee is in charge of running the meeting, and personally asks the debtors under oath about the contents of the documents they filed. Debtors are required to attend these meetings, and failure to do so will result in dismissal of the case.
Trustee Authority
The most well-known duty of the trustee, as mentioned above, is to locate and liquidate any non-exempt property owned by the debtor. Trustees earn a commission on property sold to pay creditors, so the trustee has an active interest in collecting any property that can be sold. If it is apparent the debtor does not have any non-exempt assets to liquidate, the trustee’s role in the case will be minimal, and creditors are informed there will be no distribution. The trustee determines if non-exempt assets exist by looking at the type of property a debtor owns and its value. Part of this evaluation includes looking for signs of fraud or inaccurate information. Keeping and providing clear financial records is best way to avoid any suspicion by the trustee. Sometimes, a trustee will abandon non-exempt property, meaning the debtor gets to keep it, if the value is too low and/or the expense of selling it does not justify liquidating it. For example, furniture and other household goods typically fall into this category. Otherwise, the trustee is obligated to take any non-exempt assets of sufficient value and sell them to reimburse creditors to the greatest extent possible.
Talk to an Indiana Bankruptcy Attorney
If you have significant debt that you know is beyond your ability to pay, bankruptcy may be able to relieve this burden. Attorney Christopher L. Arrington, P.C. understands how stressful and overwhelming this situation is for all involved, and offers each client the best options for their particular situation. If you live in Danville, Avon, Plainfield or the surrounding area, contact the office to schedule an appointment.