A trustee in bankruptcy is a person who is appointed by the United States Department of Justice to administer the bankruptcy estate. This means different things depending on whether the debtor files bankruptcy under Chapter 7 or Chapter 13. In Chapter 7 bankruptcy, the trustee presides over the 341 meeting of creditors, during which the schedules and statements filed by the debtor are reviewed. The trustee determines whether or not the debtor has non-exempt property that can be liquidated. If there are assets that can be liquidated, the trustee arranges for the sale of the property, uses the proceeds to pay the expenses of the sale, and then distributes the remaining balance to creditors. In a Chapter 7 case, the trustee is usually involved in the bankruptcy process for approximately four to five months after which the debtor is discharged and the case is closed.
In Chapter 13 bankruptcy, the trustee presides over the 341 meeting of creditors, reviews the schedules and statements filed by the debtor, and determines whether the plan submitted by the debtor meets all the requirements under the Bankruptcy Code. The Trustee is responsible for collecting monthly payments from the debtor and distributing those funds to the creditors as directed in the Chapter 13 plan. The Trustee is also responsible for making sure that the creditors file claims timely. In a Chapter 13 case, the trustee is usually involved in the bankruptcy process for three to five years, which is the duration of a Chapter 13 plan in most cases.
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