Duties Of A Bankruptcy Trustee
In the United States, all bankruptcy proceedings are made and litigated before the United States Bankruptcy Courts. Moreover, these court appointments are supervised and facilitated by an authorized United States bankruptcy trustee. The latter is appointed by the United States Department of Justice and performs certain duties throughout the bankruptcy proceedings.
There are two common types of bankruptcy proceedings that may be supervised by a bankruptcy trustee. These are liquidation bankruptcy and a reorganization bankruptcy. If a person filed for Chapter 7 or the basic liquidation for individuals and business, he is filing for a liquidation bankruptcy. On the other hand, examples or reorganization bankruptcy are Chapter 11 (rehabilitation or organization by for business persons and for those with substantial assets, Chapter 12 (rehabilitation for family farmers and fisherman and Chapter 13 (rehabilitation with a payment plan for individuals with a regular source of income). Among the six bankruptcy types, the most common are Chapter 7 and Chapter 13.
A United States Trustee is employed by the government to assign Chapter 7 or Chapter 13 bankruptcy trustees in bankruptcy proceedings. It is likewise his responsibility to ensure that private trustees are carrying out their duties. He is also expected to initiate legal actions to prevent bankruptcy fraud or abuse. Moreover, he ensures that all properties and estates of a bankrupted party are managed efficiently and that reasonable professional fees are charged.
A Chapter 7 bankruptcy trustee determines if the debtor has assets that can be liquidated. It is also his duty to validate the claims of exemption of a debtor and his entitlement to a discharge. He may provide objections to these claims and can act in behalf of creditors. In liquidation bankruptcy proceedings, a debtor surrenders all his non-exempt properties to the bankruptcy trustee. The proceeds of the sale of these properties will be managed and distributed among the affected creditors. Often times, these people are lawyers or accountants. On the other hand, in reorganization bankruptcy proceedings, it is the duty of the bankruptcy trustee to receive the monthly payments of the debtors and distribute these equally to all of the creditors. He needs to ensure that both the interests or the debtor and creditor will be protected and that both parties will be accorded what are due to them as stipulated by bankruptcy laws. As compensation, bankruptcy trustees are paid $60 for each case that they handle. In order to improve the efficiency of the Federal bankruptcy system, the United States Department of Justice has implemented the United States Trustee Program. This program monitors the progress and the status of bankruptcy cases including the conduct of debtors, creditors and private bankruptcy trustee. Through this program, the department also works in conjunction with the United States Attorneys, the Federal Bureau of Investigation and other law enforcement bodies to investigate cases of identity and bankruptcy fraud and abuse. The Bankruptcy Reform Act of 1978 called for the establishment of this trustee program in 18 judicial districts in the United States.
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