Chapter 13 Bankruptcy - Trustee’s Role
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In a Chapter 13 bankruptcy, the trustee’s role is to manage the debtors affairs in such a way as to support the total payment of credit debt. It is the trustee’s role to be an impartial representative for the creditors in your case. This is a very involved process, and an understanding of how the trustee in your case handles things will allow you to make wise and informed choices. It is absolutely imperative that you be open and honest with the trustee regarding your finances.
Paperwork
The trustee as well as the court will receive your proposed plan. Your plan needs to list your assets, liabilities, income and expenditures. The trustee must be provided with your recent tax returns. The list of your creditors - including name, address, amount and the reason for the extension of credit - must be complete and accurate. You will also need to provide a detailed list of your monthly living expenses. If you turn in an incomplete form, when it comes time for discharge of your bankruptcy it may be denied.
Plan
It is the trustee’s responsibility to review the proposed plan for accuracy and to insure that it is not unreasonable. The trustee is also the one responsible for insuring that all the creditors receive a copy of your proposal. The trustee has dual almost conflicting role to represent the creditors and to assist the debtor in insuring that the plan runs smoothly. The trustee will see to it that your plan provides for your living expenses, but also that your expenses are not unreasonable. He will challenge an expense that is too high. It is very likely that your standard of living will be reduced. You must show that you are making a “good faith” effort to make good on your debts. Since the trustee’s recommendation will carry a lot of weight it is a good idea to meet with him and review your plan prior to the 341 meeting
341 Meeting
This is a meeting of your creditors in which you the debtor will be placed under oath and your creditors and the trustee is allowed to ask you questions regarding your plan and your financial affairs. The bankruptcy judge will not be allowed to attend this meeting to preserve his independent judgment. Discussing your plan ahead of time with the trustee will help facilitate a less problematic solution. The other action that will help reduce problems is having a complete and accurate petition and plan.
Distribution of funds
It is the trustee’s responsibility to collect the funds of the bankruptcy and to distribute these funds. Since there is no liquidation in a chapter 13 the trustee does not have to arrange for the sale of items and the disbursement of collected funds. If your situation changes, i.e., you loose your job; you will need to notify the trustee. It is the trustee’s goal to manage the debtors affairs in such a way that the creditors are paid in full.
Next Step: Discharging a Bankruptcy
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