In all forms of bankruptcy, a bankruptcy trustee typically oversees the bankruptcy filing. Below we discuss what a bankruptcy trustee oversees specifically in a Chapter 7 bankruptcy filing. It’s always advised that when you file for Chapter 7 bankruptcy that you work with a bankruptcy attorney like a phoenix chapter 7 bankruptcy lawyer.
Role of the Bankruptcy Trustee in Chapter 7
During a Chapter 7 bankruptcy, an impartial bankruptcy trustee is appointed in order to administer and oversee the bankruptcy case. The trustee reviews the Chapter 7 bankruptcy petition to verify the information included. A trustee will review financial documents and other independent sources to ensure all information is accurate. Often times this means comparing what is listed in the filing to numerous financial documents, including: bank statements, tax statements, and pay stubs.
After the initial review, debtors are asked to attend a hearing in front of the bankruptcy trustee called the 341(a) meeting of creditors. During this hearing, creditors are allowed to come and ask questions. Typically, creditors do not attend these hearings, unless they feel you are hiding assets. The trustee conducts the hearing and asks you questions under oath regarding the information contained in the bankruptcy documents.
Sale of Assets
The largest role of the Chapter 7 bankruptcy trustee is selling any nonexempt assets of the debtor. The trustee will determine the value of any nonexempt property and then liquidate and sell that property. The profits made from the sale of nonexempt assets is then used to satisfy creditors.
If nonexempt assets are not available, the trustee files a report stating there will be no distribution to creditors.
Additional Aspects of a Trustee
In addition to the above, a trustee also oversees if there have been any preferential transfers or improperly executed security interests. This means that if a debtor pays back one creditor before paying back others, the trustee is able to pursue motions to get the money back for it to then be distributed among all creditors equally. This often happens when debtors try to pay back family members they owe money to instead of credit card companies. In this case, the family member is still considered as part of the group of creditors. Additionally, if a creditor has not properly created a lien or security interest in a debtor’s property, then the trustee can avoid that, and thus sell the property free and clear.
Working with a Bankruptcy Attorney
Bankruptcy can be an overwhelming process. That’s why we advise that you work with a phoenix chapter 7 bankruptcy lawyer that is familiar with various debt repayment options. We are committed to helping our clients understand their rights and options under the bankruptcy law and developing the debt relief solution that makes the most sense for each individual. We invite you to call (602) 648-3274 or contact our Arizona office to schedule a free initial consultation.
668 N. 44th St., Ste 320, Phoenix, AZ 85008