Understanding the role of Chapter 13 bankruptcy trustee and their critical functions

 Chapter 13 bankruptcy, also known as “Wage Earner’s Plan”, is offered to individuals who need some extra time to pay off their outstanding debt. To qualify for Chapter 13, the debtor must have a steady income from various sources, and should not have more than $2,750,000 in unsecured debts, and $2,750,000 in secured debts. The debtor is given 3 to 5 years of time to repay their outstanding debt, and must demonstrate the ability to make the scheduled payment based on their income. The proposed plan must be feasible, and for this, the bankruptcy court will appoint a trustee to work out the plan, and how to repay the creditors.  

  

The trustee has an important role to play in Chapter 13 bankruptcy. He will ensure that the proposed repayment plan complies with legal requirements, and is feasible based on the debtor’s income and expenses. The role of Chapter 13 bankruptcy trustee is quite comprehensive, he has to collect monthly payments from the debtor, and distribute them to the creditors as per the approved repayment plan. There is a strict priority order to repay the debts, child support and taxes are paid first and foremost, followed by secured and unsecured debts.   

  

Other key components that are part of the role of Chapter 13 bankruptcy trustee are:  

  

·         The trustee ensures that the submitted financial facts are detailed and questions the debtor who attends the meeting with any queries regarding the same. The trustee can also challenge the feasibility of the repayment plan especially if the expenses are high or not reasonable.  

 

·         The trustee is part of the confirmation hearing of the bankruptcy case and this meeting is scheduled approximately twenty to forty-five days after the creditors meeting. He shares the approval of the repayment plan with the judge and also raises concerns if there are objections from his end or the creditors. The Confirmation Hearing can be rescheduled if the trustee’s requirements haven’t been met by the debtor or his attorney  

 

·         The trustee manages the claims that are aimed at the estate, and it indicates that all the assets are now under the direct control of the court. The liquidation or any action on this estate needs to be approved by the bankruptcy trustee.    

  

·         If the debtor receives any property or becomes entitled to receive it within 3 months from the filing of bankruptcy, then it needs to be reported as inherited property/ entitled to inherit, property from a marital settlement or a divorce or the benefits after a death or life insurance proceeds.  

  

·         In cases of the inherited property being non-exempt, then the repayment plan needs to be revised to pay off the unsecured creditors as appropriate as needed.  

  

·         All approved plans by the court are effectively dealt with for their complete and effective fulfillment by the Chapter 13 bankruptcy trustee. The financial affairs of the debtor are reorganized and the payments to the creditors are channelized. The trustee will closely work to prevent any activities of abuse or fraud towards the debtor’s estate.  

  

If you are in a situation where your debts have become overwhelming, and consider filing for bankruptcy, then you can contact specialist bankruptcy attorneys at the Recovery Law Group. They have helped thousands earlier with successful filing for bankruptcy under Chapter 7, Chapter 11, and Chapter 13, and can help also with your bankruptcy filing. Schedule a free consultation with Recovery Law Group for more details.