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Bankruptcy Trustee: What are Their Roles under Chapter 7?

People who are in debt and are unable to pay their bills are sometimes confronted with anxieties and stress about how they will pay their loans or debts. They simply desired a reset button or a fresh start. If you are one of these persons, it is critical that you get the assistance of a bankruptcy attorney who will advise you on the bankruptcy processes, such as which Chapter you should file your bankruptcy case.

When someone declares bankruptcy, they frequently liquidate their assets in order to reimburse their creditors for outstanding loans. A bankruptcy trustee Chapter 7 is assigned to the individual who filed a Chapter 7 bankruptcy case to liquidate their property and pay off the creditors.

If you want to learn more about bankruptcy cases, particularly Chapter 7 bankruptcy, you should read this entire article which covers the following topics:

  • Chapter 7 Bankruptcy Definition
  • What is a bankruptcy trustee?
  • Bankruptcy trustee responsibilities under Chapter 7

What is Chapter 7 Bankruptcy?

bankruptcy trustee chapter 7

Chapter 7 Bankruptcy also known as straight or liquidation bankruptcy) allows everyone who has been having a hard time with their finances to start over. When a person falls into debt and has no way to turn it around, people usually go the liquidation route to cover their debts. The proceedings in which the liquidation will have to go through are governed by Chapter 7 Bankruptcy.

Chapter 7 sets a rule on how the debts are to be paid. Usually, the type of debt that is more prioritized is unsecured debt and followed by secured debt.

Unsecured debt – in its most basic term, refers to debts with no collateral. This means that if the debtor is unable to repay the loan, the lender will be without a backup or a mechanism to recoup its losses. Unsecured debt can take the shape of school or personal loans, telephone and energy bills, medical loans, and a variety of other things.

Secured debt – is the polar opposite of unsecured debt. Here, lenders require collateral coming from the debtor when they seek a loan. This implies that if a debtor fails to meet his or her obligations to repay their debts, the lender can utilize the collateral asset (e.g., your home, property, or vehicle) to recover what they owe.

What is a Bankruptcy Trustee?

When you file for bankruptcy, you create a bankruptcy estate, which is made up of the debtor’s property. The United States Trustee appoints a bankruptcy trustee to a person who petitions for bankruptcy. They are essentially an administrative officer in charge of the debtor’s bankruptcy estate. In any bankruptcy proceedings, they also represent the debtor’s bankruptcy estate.

What is the role of the bankruptcy trustee under Chapter 7?

In terms of their responsibilities and duties, it is important to take note that it varies depending on the type of bankruptcy proceedings. When you file for Chapter 7 bankruptcy, you will be appointed a bankruptcy trustee who will be tasked with liquidating your non-exempt assets in order to pay creditors. As a result, the Chapter 7 trustee’s primary task is to sell everything the debtor is not entitled to keep and distribute the proceeds to the debtor’s creditors.

A Chapter 7 bankruptcy trustee’s principal powers and tasks are as follows:

They go over the bankruptcy petition, paperwork, and any supporting documentation.

In filing for a bankruptcy case, it involves a lot of paperwork that needs to be accomplished so that your case may push through. A bankruptcy trustee will have to review the bankruptcy petition, which will need them to sit in with you to understand your situation. They will also be in charge of investigating any irregularities in your bankruptcy filing, such as disparities between the stated and actual quantity of assets. The trustee is essentially seeking for evidence of bankruptcy fraud.

The bankruptcy trustee will most likely request your personal information and financial condition, such as how much debt you have, how many properties you own, how much you make, and other relevant facts that will construct your financial landscape or profile.

You may also be required to produce papers that support the information you have provided, such as pay stubs, bank statements, tax returns, and so on.

They are in charge of the 341 creditors’ meeting.

The 341 meeting of creditors typically refers to a meeting where the three parties – debtor, lender, the bankruptcy trustee – will meet in order to discuss the financial matters and other bankruptcy paperwork. 

What usually happens during this meeting is that the trustee will ask for identification documents from you like a valid ID or your Social Security number. After such identification, the trustee will ask you questions that are related to your bankruptcy paperwork. Creditors who present at the hearing may ask questions to the debtor about financial concerns. However, creditors seldom attend any of these sessions unless they have questions about the debtor’s finances that they require answers to.

Gather and sell all of the debtor’s non-exempt properties (known as the bankruptcy estate).

The next thing that the bankruptcy trustee will do after the verification process and 341 meetings of creditors is to gather the properties of the debtor in order to sell them. When a bankruptcy trustee finds adequate justification (for example, if you have enough properties to sell) to approve your bankruptcy petitions, the trustee will ask you to assist them in gathering your properties.

It is critical to recognize that only non-exempt properties or assets may be sold. In this instance, you would need the assistance of a bankruptcy attorney to go through your properties and assets.

Why seek help from a bankruptcy lawyer?

The reason why you file for bankruptcy is because you can no longer pay your creditors, so, in this sense, you can no longer afford to hire a bankruptcy lawyer. Hiring a bankruptcy attorney, on the other hand, provides you an advantage. They are the ones who understand the complexities of state and federal bankruptcy legislation. They can also assist you in determining whether properties are non-exempt.

Individuals who do not own a large number of properties usually choose to pursue bankruptcy proceedings on their own, but those who own a large number of properties and whose bankruptcy case is more complicated will need to seek the assistance of a bankruptcy attorney.

Making bankruptcy related decisions is hard, so let a bankruptcy lawyer from Kurland Law Group help you.

We understand that you want to start again, to live a life free of debt. We at Kurland Law Group will want you to succeed in this endeavor.

Our more than two decades of expertise have made us more proficient at dealing with circumstances like these. As a debt relief business, we are well-versed in mounting techniques to help our customers get out of debt.

So, if you wish to begin your life again free from debt, call our bankruptcy attorneys and let us assist you in your bankruptcy proceedings. 

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