The Role of the Chapter 7 Trustee

The primary role of the Chapter 7 trustee is to administer your bankruptcy case. Once you file your Chapter 7 bankruptcy, a trustee is appointed to your case. This trustee is an impartial administrator appointed by the United States Trustee's office. This trustee is assigned to both administer your case and also liquidate any unexempt assets you have for distribution to your unsecured creditors. Now, most of the time there will be no property to liquidate because your assets will be completely exempt, but if there are unexempt assets, the trustee's role is to liquidate these assets in such a way to ensure the greatest return for your unsecured creditors. At the same time, the Chapter 7 trustee will also pursue any actions that you have at the time of filing, such as actions to recover money that is owed to you.

Although the trustee is not required by law to be an attorney, they are often bankruptcy attorneys themselves and therefore are very knowledgeable and familiar with the customs, laws, and rules of Chapter 7 bankruptcy. The trustee also has a duty to ensure that you have met and complied with the applicable bankruptcy laws under the Bankruptcy Code. To fulfill this duty, the trustee has the power to make sure that your case meets these rules. For example, the trustee has the power to avoid preferential transfers that you made to certain creditors prior to filing.

At the end of the day, a trustee's responsibility is to ensure that you are being truthful in the filing of your bankruptcy case. If there is an unexempt property in your bankruptcy case, the trustee can liquidate it for the benefit of your unsecured creditors and receive a portion of the proceeds. While it may seem that this would encourage a trustee to attempt to liquidate any potential asset, this is rare because most debtors do not have any unexempt property.