When you file for Chapter 7 or Chapter 13 bankruptcy, a bankruptcy trustee is appointed to administer your bankruptcy case (often called the case trustee). But there is another trustee involved in bankruptcy -- the U. S. Trustee. The U.S. Trustee's role in your Chapter 7 or Chapter 13 case is often behind-the-scenes; but it can play a more visible role in some situations. The U.S. Trustee is much more active in Chapter 11 cases.
Read on to learn about the U.S. Trustee and what it does.
(For articles on the bankruptcy case trustee, see our Bankruptcy Trustee area.)
The United States Trustee Program, as it is formally called, is a division of the Department of Justice. It was created by Congress to oversee the bankruptcy process, including the administration of bankruptcy cases and private trustees. This is a big job with many functions. And although the U. S. Trustee can serve as a case trustee, it generally does not.
By law, the U. S. Trustee is authorized to appear before the court and take an active role in any bankruptcy case.
In most instances, when you file for bankruptcy under Chapter 7 or Chapter 13, you will have no direct contact with the U. S. Trustee. This does not mean that the U. S. Trustee is not taking an active role in your case. It is performing many functions behind the scenes. It may assume a more visible role if, in particular:
In Chapter 7 bankruptcies, the U. S. Trustee is required to review the debtor's financial situation and report to the court on whether the bankruptcy debtor who has primarily consumer debts has qualified for relief under the means test. (Learn more about the Chapter 7 means test.)
If the U. S. Trustee determines that your income, less certain allowable expenses, exceeds the median income for your state, the U. S. Trustee may determine that discharging your debts under Chapter 7 (rather than under Chapter 13) constitutes a substantial abuse of the bankruptcy laws. If this occurs, the U. S. Trustee will file a motion with the court seeking dismissal of your bankruptcy case. At this point, you will have three options. They are to:
In Chapter 7 cases, the U. S. Trustee also:
In Chapter 13 bankruptcies, the U. S. Trustee’s role is primarily appointing and monitoring the performance of the standing case trustees. The U. S. Trustee:
The U. S. Trustee is probably most visible in Chapter 11 bankruptcy cases. In most Chapter 11 cases, there is no case trustee appointed. Instead, the bankruptcy debtor, called the "debtor-in-possession," is charged with performing most duties of the case trustee. The U. S. Trustee:
The U. S. Trustee is actively involved in pursuing those engaging in bankruptcy crimes. The U. S. Trustee accepts criminal referrals from virtually any source (creditors, trustees, or any third parties) and performs a preliminary investigation to determine whether there is any support or merit to the referral. If there is, the U. S. Trustee prepares a formal referral to the appropriate governmental agency for further investigation and/or prosecution. Depending on the underlying facts and circumstances, the U. S. Trustee may participate with other agencies in the investigation of crimes involving bankruptcy and assist with the actual criminal prosecution.