Who does the bankruptcy trustee represent? Is she my friend or foe in the case?
The Chapter 7 and Chapter 13 bankruptcy trustee represents the bankruptcy estate.
The bankruptcy trustee does not represent you or your creditors. When you file for bankruptcy, a bankruptcy estate is created. The trustee represents the bankruptcy estate. It is the trustee's job to collect all of the property of the estate (including your nonexempt property), convert it to cash, and use that money to pay creditors who have valid claims.
There are times when the trustee will seem like your friend and other times when the trustee will seem like your foe. But in reality, the trustee is neither -- she or he is merely representing the interests of the bankruptcy estate.
Duties of the Bankruptcy Trustee
The trustee has many duties to fulfill as the bankruptcy estate's representative, including the duty to:
- object to your claims for exemptions where appropriate
- object to creditors' claims that are not appropriate
- protect and preserve the assets of the estate
- pursue avoidance actions against creditors who received preferential or fraudulent transfers, and
- review records and investigate financial transactions where appropriate.
The trustee also has the right, and perhaps the duty under certain circumstances, to object to your discharge if the facts indicate that you are not entitled to receive it under the bankruptcy law.
In most areas, the trustee is supervised by the Office of the United States Trustee, a division of the Department of Justice. The trustee has to follow the U.S. Trustee’s guidelines and training, and provide the U.S. Trustee with regular reports on the status and finances (including details of financial transactions) of all the cases the trustee has been appointed to administer. In Alabama and North Carolina, the Bankruptcy Administrator performs the functions of the U.S. Trustee.