subject: The Functions Of A Bankruptcy Trustee [print this page] The Functions Of A Bankruptcy Trustee The Functions Of A Bankruptcy Trustee
Once the court says that it's ok for your Chapter 13 filing to go forward, you will be assigned a bankruptcy trustee. The bankruptcy trustee is the person to whom you will pay the amounts agreed upon in your repayment plan submitted to the court. The trustee uses the money that you pay him to repay the creditors as specified by your plan.
He gets something out of this also. He takes a court approved percentage of all the money that you give him to pay himself for services rendered. If your ability to pay changes over the 3 to 5 year period. the trustee can ask the court to modify the amounts of the payments based on your new income status.
For instance, let's say that your salary is $4,000 a month. And, then your employer has to cut your hours back to the point where you are only bringing in $3,000 a month. The trustee may ask the courts to approve a decrease in the dollar amounts that are paid to the creditors each month. Conversely, if you were to see your income increase to $6,000 a month, the trustee may ask the courts to approve an increase in the amounts of money that can be paid to the creditors.
The primary reason that Chapter 13 bankruptcies have this feature is to increase the odds that the creditors will be paid back as much as possible and as quickly as possible, while still letting the debtor retain solvency.
Most people who file Chapter 13, instead of Chapter 7, do so in order to protect as much of their property from being sold as possible. Unlike Chapter 7, however, it doesn't necessarily discount the amount of money that you owe your creditors.
For instance, if you have adequate unshielded equity in your home to pay back your creditors, you will be able to keep your home. But you will also have to develop a creditor repayment plan that will allow for your creditors to be repaid in full during the course of the bankruptcy period. But, if your unprotected equity in the home is not enough to pay off your creditors, either the full amount or a significant part of the amount that you owe will be dismissed.
All through your bankruptcy period, your assigned bankruptcy trustee is the individual with whom you will primarily communicate with. He is the one that you will go to with any questions or problems that pop up while you are in the bankruptcy stage. This is true even though the trustee is actually the representative of the creditors.
This is because although his primary aim is naturally to ensure that the creditors whom he represents get the monies from you that they are entitled to, he realizes that the best way of doing that is to make sure that you, the debtor, remains involved in the process. If he can do this, the situation winds up as a win/win for everyone involved.
