If you’re considering filing Chapter 7 or Chapter 13 bankruptcy, you need to be aware of the different components of the filing process, including the role of the bankruptcy trustee. The court-appointed bankruptcy trustee plays a vital role during bankruptcy because they represent debtors’ estates and will make recommendations to the bankruptcy court.
When starting the filing process, the bankruptcy trustee will investigate your finances and assets to determine whether you’re eligible to file. Depending on whether you file under Chapter 7 or Chapter 13, the trustee has the power to liquidate non-exempt assets and determine whether you can discharge your debts in accordance with the United States Bankruptcy Code.
Here’s what you need to know about the bankruptcy trustee and what they will investigate.
A bankruptcy trustee is an official representative appointed by the United States Trustee Program, which is part of the Department of Justice. Although the trustee will make recommendations to the Bankruptcy Court regarding what actions to take, the bankruptcy judge has the final authority.
Additionally, the bankruptcy trustee cannot take any steps without the Bankruptcy Court’s approval. The full scope of the bankruptcy trustee’s responsibilities will depend on whether you’re filing under Chapter 7 or Chapter 13.
Whether you’re filing Chapter 7 or Chapter 13, the bankruptcy trustee will hold the 341(a) Meeting of Creditors, an obligatory meeting for bankruptcy filers. At the meeting, the trustee asks the bankruptcy filer questions under oath to ensure that the filer didn’t lie or make mistakes when completing the bankruptcy paperwork. The trustee will ask questions verifying the filer’s assets and finances, and they’ll ask about any problems or inconsistencies with the filer’s paperwork.
A bankruptcy trustee overseeing a Chapter 7 bankruptcy has many responsibilities.
First, the trustee will review the debtor’s means test, and survey their financial information. The trustee may request documentation that corroborates the debtor’s financial situation and assets, and they’ll also inform the filer of any information they need for the 341(a) Meeting of Creditors.
If you file under Chapter 7, the bankruptcy trustee will investigate your assets and finances to determine your filing eligibility, and to determine if there are non-exempt assets they can liquidate.to pay back creditors. It’s important to remember that most Chapter 7 filers don’t lose any of their possessions during the liquidation process because of exemptions.
Finally, the trustee will determine whether or not there are grounds to deny the discharge your debts through Chapter 7. If you hid or lied about your finances and assets, the trustee will object to the Court discharging your debts. Other reasons why they may object to your discharge include:
- You deceived the trustee or the court.
- You already filed Chapter 7 bankruptcy in the last eight years.
When a debtor files under Chapter 13 bankruptcy, the trustee must verify their identity and review their finances and assets — as was the case with Chapter 7 — but they must also determine whether the debtor can fund their Chapter 13 repayment plan. In addition, the trustee will review to see if the Debtor’s Chapter 13 Plan meets all the requirements of approval or “confirmation”. The Trustee makes reports to the Court, but once again, the Judge in the bankruptcy process has the final say.
During the filing process, the trustee has the right to survey all of your finances and assets, and they can request any additional supporting documentation. The trustee will investigate whether any inconsistencies in your filing indicate fraud.
The trustee can also subpoena others to testify about your finances. For example, if the trustee suspects you have money or valuable assets you’re hiding, they can subpoena a friend or family member who may have information about the money.
During the Meeting of Creditors, the bankruptcy trustee will also ask questions you must answer under oath. These questions aim to clarify any red flags or inconsistencies within your finances that indicate dishonesty.
Some of these signs of fraud include undisclosed or undervalued property, transferring property in anticipation of filing, not verifying income, making preferential payments to a creditor — such as paying back a debt to a family member — and spending excessively.
Plus, the trustee will likely ask you questions to verify your identity and ensure you filed the paperwork correctly.
Suppose you knowingly or mistakenly hid or misrepresented your finances or assets, the bankruptcy trustee will likely object to the Court discharging your debts. Additionally, if you committed fraud during the bankruptcy process, you may face felony charges with hefty fines and possibly jail time.
If you’re considering filing Chapter 7 or Chapter 13 bankruptcy, don’t go through the process alone — contact an experienced bankruptcy attorney today. A bankruptcy attorney can help you ensure that you file correctly, and they’ll work to help you get your finances back on track.
For bankruptcy legal assistance you can count on, contact the Indianapolis bankruptcy attorneys at Sawin & Shea, LLC. Schedule a free consultation today by calling 317-759-1483, or you can request an appointment online here.