When you file for Chapter 7 bankruptcy, the court will assign your case to an official known as the United States Trustee. The trustee is appointed by the Attorney General of the United States to serve as an impartial overseer of the bankruptcy process. In Chapter 7 cases, the trustee’s primary roles include liquidating a debtor’s nonexempt assets and distributing the proceeds to the creditors who file a valid claim.
The Trustee & Chapter 7
Initially, the trustee is responsible for reviewing a debtor’s bankruptcy petition and ensuring the accuracy of the information provided. In other words, if you file for Chapter 7 protection and understate your income or try to hide any non-exempt assets, the trustee is likely to find out. Indeed, your first personal interaction with the trustee will come at an examination hearing, where you must answer questions about your finances under oath.
This examination is technically known as a Section 341 hearing. This refers to the section of the Bankruptcy Code that provides for a “meeting” of your creditors. In many cases, your creditors do not personally appear at this meeting, especially if your paperwork is in order and there is no reason to suspect that you have supplied inaccurate information.
As noted above, the trustee is also responsible for selling any of your property that is not specifically exempt from the bankruptcy proceedings under Oklahoma law. For example, Oklahoma allows a debtor to protect up to $7,500 of equity in a motor vehicle. (This exemption is doubled to $15,000 for married couples.) If your car is worth less than $7,500, the trustee cannot touch it. But if it is worth more, the trustee can sell the vehicle, give you the $7,500 of exempt value, and use the remainder to pay your creditors.
The Trustee & Chapter 13
If you file for Chapter 13 bankruptcy instead of Chapter 7, the trustee’s role is slightly different. In Chapter 13, you are required to file a repayment plan with the bankruptcy court, allowing your creditors to get the money you owe over a period of up to 5 years. In these situations, the trustee will examine your repayment plan to ensure it complies with the law. Once approved, you actually make your monthly payments directly to the trustee, who will, in turn, make sure your creditors are paid. The trustee will also monitor your finances–including whether you file any required tax returns–during the term of the repayment plan.
If you want to know more about the trustee’s role or have questions about Chapter 7 or Chapter 13 in general, an Oklahoma City bankruptcy attorney can help. Contact the offices of Deborah Brooks & Associates, P.C., if you need assistance with a bankruptcy matter today.