The Role of the Bankruptcy Trustee in Chapter 13

The trustee will get a minimal fee for assessing your bankruptcy paperwork and a percentage of the assets they sell. This incentive is to encourage the trustee to fastidiously examine your property, including properties that are transferred or sold before filing bankruptcy. Although trustees are required to be fair, their own interests will always take precedence. Hence, it will always depend on every trustee concerning how much they are willing to help you.

Below are the salient roles of bankruptcy trustee in Chapter 7 bankruptcy in Kansas City, Missouri:

Reviews your Bankruptcy Petition

Bankruptcy filings entail accomplishing a petition and other pertinent bankruptcy paperworks and schedules. In this paperwork, you will provide your financial and personal information regarding your debts, income, property, and financial affairs. You will also need to send substantial information to the bankruptcy trustee, such as tax returns, pay stubs, and your assets.

One of the prime duties of every bankruptcy trustee in Kansas City is to assess your petition for bankruptcy and validate all the pertinent calculations and information using their sources and financial documents. If you disclosed that you earn $3,000 per month, for example, the bankruptcy trustee would compare your pay stubs to see if this is true.

Examine the Chapter 7 Bankruptcy Debtor

A month following the filing of your bankruptcy petition, you are required to participate in a 341 meeting of creditors. This is done while the bankruptcy trustee is present. While creditors can throw questions at you at the 341 meeting, there are slim chances that they will attend. In most cases, creditors only attend when they suspect you of hiding some assets. One of the roles of the bankruptcy trustee in Chapter 7 Kansas City is to initiate the hearing and ask questions about the data contained in your form while you answer them under oath.

Sell Chapter 7 Bankruptcy Assets

The trustee in a Chapter 7 Bankruptcy is responsible for selling your properties if you cannot protect them. The funds that they will get from those will be distributed to the creditors. In Chapter 7, you can retain or exempt some amounts of your property such as clothing, household furnishings, or qualifying retirement accounts. Your protected assets will always be determined by state exemption laws.

• If you have nonexempt property – Nonexempt property is a property you possess that is beyond and above the allowable amount by your state. This will be sold by the bankruptcy trustee and have the funds distributed to your creditors. Before filing for Chapter 7 bankruptcy, knowing what will probably happen to your properties is crucial. You do not have a legal or automatic right to have your case dismissed. Judges in bankruptcy court will not allow you to cancel the petition just  because you discovered too late that the bankruptcy trustee would sell your property.

• If you don’t have nonexempt property – If none of your assets were exempted, the bankruptcy trustee would issue a report stating that your case is classified as “no-asset,” which means no distributions will be made to your creditors.

There are cases when a debtor and the bankruptcy trustee will not agree on the exemption status of some assets. In cases like this, the judge has the right to make the final decision. If you are having problems because your properties cannot be turned over, your bankruptcy attorney will help you.

Avoid Security Interests and Certain Transfers

In addition, the trustee in bankruptcy has a number of powers to prevent inaccurately executed security interests or preferential transfers. If you have transferred property to another individual or paid creditors you prefer, such as friends or family members, the trustee can legally avoid or undo them and recover the property or money to disperse among your creditors.

Likewise, if a creditor placed an improper security or lien on your property, the trustee can avoid them by selling the property for free and removing the lien. These circumstances, however, are uncommon. It is most likely to occur if a family member or friend is the lender and was unable to properly prepare the loan paperwork or record the lien.