A Chapter 13 bankruptcy usually takes three to five years to complete before you can receive a discharge. During this time, the Chapter 13 bankruptcy trustee performs many duties ranging from making sure your repayment plan complies with bankruptcy laws to actually administering the plan after it is approved by the court.
Here are the main duties of the Chapter 13 bankruptcy trustee.
(You can learn about the Chapter 7 bankruptcy trustee's duties and powers here.)
When you file for Chapter 13 bankruptcy, you must file a set of bankruptcy documents with the court with information about your income, monthly expenses, assets, and debts. Based on your income and expenses, you must also propose a payment plan to repay all or some of your creditors during the life of your bankruptcy. After your file your bankruptcy papers, you must also send the Chapter 13 trustee certain documents such as tax returns and pay stubs.
The Chapter 13 trustee will review your entire bankruptcy petition including your repayment plan and your documents. It is one of the trustee’s responsibilities to make sure that your income calculations are accurate and your expenses are reasonable, and that your Chapter 13 repayment plan is fair to your creditors.
After reviewing everything, the trustee will let you know if he or she has any objections to your bankruptcy and request more documentation if needed. Chapter 13 trustees are charged with maximizing the return to your unsecured creditors so most objections are centered around increasing your plan payments and distributions to creditors. If you cannot reach a resolution with the trustee, then a judge will hear both sides and make a determination as to what your plan payments should be.
About a month after your case is filed, you are required to go to a meeting of creditors to be examined under oath about the information in your bankruptcy papers. The Chapter 13 trustee oversees the hearing and asks you questions regarding your income, assets, or any other information relevant to your bankruptcy to make sure everything is accurate.
Within 30 days of filing your Chapter 13, you must begin sending monthly payments to the bankruptcy trustee according to your proposed plan. Until your repayment plan is approved by the court, it is in a temporary state where the trustee holds the funds in trust for your creditors. After your plan is approved and finalized, the Chapter 13 trustee begins distributing the funds to your creditors in accordance with the terms of the approved plan.
Since it takes three to five years to complete a Chapter 13 plan, the trustee is charged with receiving your payments and paying them out to your creditors until your plan is completely paid off. During this time, the trustee must also keep an accounting of all monies received and how much has been paid out to each creditor.
In order to get paid through your Chapter 13 plan, creditors must file a document called a "proof of claim" with the court within 90 days of your meeting of creditors (government creditors have 180 days from the filing of the bankruptcy). The proof of claim states the amount that you owe the creditor and has attached to it certain required documentation. The Chapter 13 trustee is charged with reviewing these creditor claims and objecting to any claims that are not filed properly or that do not have the correct documentation.
(Learn about bankruptcy trustee compensation and fees here.)