Harris-Courage & Grady, PLLC
What is a Chapter 13 Trustee?
If you file a Chapter 13 bankruptcy, the trustee will be an important part of your case. In this post, we’ll explain what a Chapter 13 Trustee does for the bankruptcy process.
Chapter 13 bankruptcy takes from three to five years to complete. During that time, debtors make payments according to a financial plan that allows them to repay all or part of their debt. The Chapter 13 Trustee oversees the plan and ensures that it is feasible.
Chapter 13 Trustees have the responsibility to assist both debtors and creditors. They want to make sure that the bankruptcy plan is fair to both parties. If either party is committing fraud or treating the other party unfairly, the Chapter 13 Trustee is there to put a stop to it.
They also act as investigators. They look at all of the financial information debtors provide. Before filing Chapter 13 bankruptcy, debtors have a meeting with a Chapter 13 Trustee. One purpose of the meeting is to ensure that there is no fraud. Another purpose of the meeting is to check that the bankruptcy plan is feasible. The Chapter 13 Trustee does not want debtors to have financial obligations that they cannot meet. The Chapter 13 Trustee also needs to make sure that creditors receive fair treatment.
Chapter 13 Trustees mediate disputes between creditors and debtors. Because they can talk directly to both sides, they can often suggest compromises that otherwise wouldn’t be reached. This saves time and money for both debtors and creditors as there are fewer issues that courts need to resolve.
When in a Chapter 13 bankruptcy, the debtor pays the Trustee as agreed in the financial plan, and the Trustee pays the creditors. The Trustee is responsible to make sure that debtors pay, and that creditors receive what they deserve.
Chapter 13 Trustees also act as advisors and educators.
While debtors are in a Chapter 13 plan, they are not permitted to incur new debt, refinance loans, or sell assets without permission from the Trustee or the bankruptcy court.
However, because Chapter 13 plans last several years, it is very common for debtors to need to replace vehicles, repair homes, and/or meet emergency financial needs while they are still in bankruptcy. The Chapter 13 Trustee reviews the debtors’ situation and helps them to find a solution to the financial need that will still allow the bankruptcy plan to be completed.
Chapter 13 Trustees want debtors to succeed with their bankruptcies. They are an important part of the bankruptcy process.