Understanding The Role Of Your Chapter 7 Bankruptcy Trustee
When your bankruptcy paperwork is received by the federal court, you are assigned a trustee. Bankruptcy trustees are appointed to oversee cases and their roles involve several facets of your case. It's important to know that trustees are not necessarily on your side nor are they adversarial – they are supposed to be neutral, just like a judge would be. Read on to find out more about the role of the trustee and, consequently, about some of the most important milestones you will encounter during the bankruptcy process.
One of the first events in your bankruptcy case is a review of your paperwork. As you might guess, a chapter 7 bankruptcy requires quite a lot of paperwork to be filled out by you with your lawyer's help. The trustee will be looking over the bankruptcy packet of documents with an eye toward anything unusual. For example, they may verify that your income numbers match what is on your pay stubs. Before the creditor's meeting, the trustee will ask you to submit what is known as 521 documents.
Uncover Hidden Assets
You cannot sell or give away property in an effort to protect it from seizure. Depending on the value of the property, the trustee can look back several years in an effort to determine the details of the transaction. If you can show that you sold the item well before you intended to file, the transaction is allowed to stand. If not, the transaction can be undone. Another part of uncovering hidden assets is locating incidences where you "favored" a creditor by paying them more than what the trustee considers a fair share. For example, you might repay a personal loan in full to avoid having it appear on your bankruptcy paperwork.
The Creditor's Meeting
You might get to meet your trustee in person at this meeting. Along with a room full of other filers, you will be asked about your bankruptcy paperwork, your income, your income tax filing status, and more. Mostly, the creditor's meeting is sans creditors and is short and uneventful.
Creditors are Paid
Most of the people and businesses you owe money to do not expect to be paid once you file bankruptcy. If there are any funds after the trustee has seized and sold your property (which is not common), creditors will be paid on a priority basis. Tax debts and spousal support claims are paid before that of a credit card company, for instance
Once all is said and done, the trustee declares your debts fully discharged and you will receive the final paperwork in the mail. Speak to a business like Phoenix Law to find out more.