BANKRUPTCY-CHAPTER 7 TRUSTEE
What does a chapter 7 trustee do is best answered according to the National Association of Bankruptcy Trustees. as follows:
Although their obligations are many and varied, the Chapter 7 Trustees’ primary goal is to liquidate assets for the benefit of creditors where possible. Chapter 7 Trustees distribute approximately $1.5 billion each year to creditors. In approximately 90% of the Chapter 7 bankruptcy cases filed, there are no assets available for liquidation, either because assets are exempt (protected) by debtors or encumbered by secured creditors. In all cases, Chapter 7 Trustees must investigate the debtor’s affairs, examine the debtor under oath, and submit reports to the bankruptcy court and Office of the U.S. Trustee.
The Panel Trustee will review the debtor’s petition and schedules after they have been filed with the Court. The Panel Trustee may request additional information from the debtor to review in conjunction with the debtor’s petition and schedules. The Panel Trustee specifically reviews the debtor’s exemption schedules to determine whether the debtor has properly followed the state or federal exemption laws. The Panel Trustee formulates questions to ask the debtor at the Section 341 hearing regarding the debtor’s assets, liabilities, income and expenses. The Panel Trustee serves as the hearing officer for the 341 hearing. Each debtor is sworn and examined by the Panel Trustee and the creditors are allowed the opportunity to ask questions which is moderated by the Panel Trustee. After the Section 341 hearing, the Panel Trustee will object to exemptions that have been improperly claimed. The Panel Trustee must file an objection to the claimed exemptions within 30 days of the Section 341 hearing. The Panel Trustee will seek turnover of assets held by the debtor or other parties and will arrange for their eventual sale. The Panel Trustee may also seek to recover assets conveyed by the debtor prior to the filing of the bankruptcy. This could include payments made by the debtor to its creditors within 90 days of the bankruptcy filing or 1 year if the payments were made to related parties of the debtor. The Panel Trustee will cause a notice to be given to all creditors to file their claims with the Bankruptcy Court. The Panel Trustee will then pay creditors according to the priority level they have been given by the Trustee. After all funds held by the Panel Trustee are distributed, the Trustee will seek approval of the Court to close the bankruptcy case. National Association of Bankruptcy Trustees is the source of the above information.