When Are Private Bankruptcy Trustees Needed?

For all bankruptcy filings, bankruptcy trustees are required for administering and regulating the bankruptcy proceedings. The Department of Justice (DOJ) of the US has a panel of special trustees known as US trustees to regulate the bankruptcy cases in all the states of the nation as per the bankruptcy federal and state laws. Such US trustees are appointed by the court in order to protect the integrity of the federal bankruptcy system.

Private Bankruptcy Trustees

A private bankruptcy trustee is a bankruptcy lawyer of a state appointed by the US trustees for administering the estates of the debtors and for protecting the US bankruptcy codes and regulations. These trustees are not government employees but are appointed by the US trustee and thus they are referred to as private trustees. Generally a list of private trustees is appointed for various kinds of bankruptcy cases in each and every state in the US. The term of office for all private trustees is just a year and it might be renewed by the court.

When Are They Needed?

Private bankruptcy trustees are required for the processing of each and every bankruptcy cases filed in a state under different Chapter codes. Right from the beginning of bankruptcy filing, a trustee does the work of checking the bankruptcy filing form for accuracy and consistency. Such a trustee conducts the creditors’ meeting and arrange for liquidation of the debtors’ properties (for Chapter 7 bankruptcy cases), disbursement of the funds to the creditors based on the priority basis.

Importance of Private Trustee

As US trustee cannot oversee all the bankruptcy proceedings in all the states of the nation, it appoints a panel of private trustees to manage and protect the integrity of the bankruptcy laws equally throughout the nation. A private trustee is important for discharging any debts if the creditor is found to have fraudulent intentions for collecting the debts. They are also important for ensuring that the bankruptcy regulations are followed properly by the debtors. Such a trustee is important in checking the list of exempted assets, arrange for the disbursement of the debts paybacks and acting as an intermediate between the creditors and debtors.

Getting Legal Aid

While filing bankruptcy cases, you might not be aware of all your rights as a debtor. You will have to understand the role of a trustee as he or she is important for the management and administration of your bankruptcy case. Consult with an attorney to know more details in this regard.