Chicago Bankruptcy Trustee Role Differs From Chapter 7 to Chapter 13

20-Jan-2011 Every bankruptcy case, despite it being a chapter 7 or chapter 13 case is assigned a trustee. The trustee works alongside the debtor to determine the necessary actions to complete the bankruptcy process.

A trustee is assigned to every person filing bankruptcy. However the job done by the trustee varies greatly depending on the type of bankruptcy that is being filed.

When chapter 7 is filed it is assumed that a person has qualified for chapter 7 by passing a means test to prove that they meet the income requirements. A trustee will start by looking at the assets owned by the debtor. If the assets are more than what is allowed to be exempt in a chapter 7 filing then the trustee will be responsible for liquidating those assets. The trustee is paid with the money garnered from the liquidation as are the creditors. Some of the money will also go to the debtor. It is quite common for a chapter 7 case to involve no assets.

The trustee assigned to a chapter 13 case has a much different role. When someone files a chapter 13 bankruptcy case they are allowed to keep their assets however they are required to make payments against their debts for the following 3 - 5 years. This payment is paid directly to the trustee who then distributes it between the creditors and keeps a commission for themselves.

Many people who file bankruptcy will never actually meet their judge in person. They will however spend time with their trustee. The trustee attends the creditors meeting.

A trustee is not put in place to be either an advocate or opponent of the debtor. Assuming that the debtor has provided factual and clear information about their finances then there should be no conflict between them and their trustee. In the event that the trustee and debtor are unable to agree a judge would be required to settle the dispute. Alternatively, if there was to be a disagreement between a creditor and the debtor they would need the agreement of the trustee so it is in their best interest to be flexible and work together in receive approval from the trustee.

Since a trustee isn't exactly working with the best interest of the debtor in mind it becomes even more important that you arm yourself with the resources of a qualified bankruptcy attorney to see you through the process.

Chang and Carlin
The content found on the Chang & Carlin site is not legal advice and is purely for informational purposes. The information contained herein is not a substitute for the advice of an attorney and does not create an attorney-client relationship. If you are interested in obtaining information about chapter 7 bankruptcy, chapter 13 bankruptcy, foreclosure services, real estate legal services, you are encouraged to call our law firm at 866-790-8601 or Request a Free Legal Evaluation. Chang and Carlin serves clients in Chicago, Schaumburg, Joliet, Warrenville, Waukegan, Illinois.