When you file for bankruptcy a trustee is assigned to your case. This person is not there to help you. As a matter of fact, the trustee’s main responsibility is to take money and assets from you and pass it along to your creditors. The more money that is taken for creditors the more the trustee gets in payment.
What does this mean if you’re filing for bankruptcy?
Understanding the Role of the Bankruptcy Trustee
It’s important to understand the role the trustee plays because many people assume the trustee is someone on their side during the process.
What the trustee does and doesn’t do depends on the chapter bankruptcy you choose, but you should never assume this person is working for you. They are not.
If you have no assets and you file for bankruptcy, the trustee’s job is to review the paperwork and facilitate the meeting of creditors. This is the time when creditors can dispute your claims and fight for the money they are owed. It can be an intimating phase of your bankruptcy, but your attorney attends with you and for most people, it concludes without incident.
After the meeting, the trustee submits a report to the court and the case moves forward. Soon after, your debts are discharged and your Chapter 7 bankruptcy is complete.
You can learn more about the meeting of creditors in this explanation from The Balance.
On the other hand, if you file for bankruptcy and you do have assets, the trustee’s job is to recover as many of them as possible. Any asset that is not exempted in your bankruptcy can be taken by the trustee, which is why it’s so important to work with an attorney who understands how and what to exempt.
It’s important to keep in mind that this asset recovery performed by the trustee isn’t necessarily concluded once your debts are discharged. In some cases, trustees have months or years to recover assets.
And as much as you’d like to run in the opposite direction of the trustee, you’re legally obligated to cooperate, provided the trustee is acting within the letter of the law. You must turn over important documents and any funds the trustee requests, as long as it’s legally required.
Trustees are Paid Out of the Money Recovered from You
One of the most important things to remember, especially if you feel like a bankruptcy trustee is working on your behalf, is that trustees earn their money based on what they recover from you.
In addition to a small portion of your bankruptcy filing fee, a trustee’s commission is a percentage of what they are able to distribute to your creditors. This amount varies from case to case based on the amount they recover, but the bottom line is they are going to work hard and hustle to get as much as possible for your creditors because a significant chunk of that goes into their pocket.
If you have questions about bankruptcy trustees or you are concerned nobody will be in your corner defending your rights during your bankruptcy, we can help. Contact the Law Office of Robert M. Geller at 813.254.5696.