When people file for bankruptcy, there is a Chapter 7 Trustee that oversees the entire process for all cases. They have many tasks they carry out, so continue reading to learn about the obligations for a bankruptcy trustee.
What a Chapter 7 Trustee does is best answered according to the National Association of Bankruptcy Trustees as follows:
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 about 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 filing 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 reviews the debtor's exemption schedules explicitly to determine whether the debtor has properly followed the state or federal exemption laws. The Panel Trustee formulates questions to ask the debtor at 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 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 the turnover of assets held by the debtor or other parties and arrange for their eventual sale.
The Panel Trustee may also seek to recover assets conveyed by the debtor before filing the bankruptcy. This could include payments made by the debtor to its creditors within 90 days of the bankruptcy filing or one 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 the Trustee has given them. After all funds held by the Panel Trustee are distributed, the Trustee will seek the Court's approval to close the bankruptcy case.
If you are faced with needing to file a Chapter 7 Bankruptcy and need an experienced bankruptcy attorney. Charles W. Daff will be your advocate while you go through the process, ensuring you know your rights and are well-represented in your case. With over 43 years of experience in bankruptcy law, you can trust Charles W. Daff to navigate this overwhelming time and guide you through this legal process. If you reside in Orange County, Riverside County, San Bernardino County, or Los Angeles County and are considering filing for bankruptcy, contact us today to schedule your free initial consultation.