A bankruptcy trustee has a variety of responsibilities, depending on the type of bankruptcy. When a person files for bankruptcy in the United States under Chapter 7, for example, the bankruptcy trustee will liquidate the debtor’s assets and distribute them to various creditors in accordance with the laws of the state where the debtor resides. A bankruptcy trustee can assist in the creation and enforcement of reorganization plans under Chapter 11 bankruptcy laws. If the debtor files for bankruptcy under Chapters 12 or 13 of the United States Bankruptcy Code, the bankruptcy trustee will oversee debt repayment in accordance with statutes and ensure that fraud and abuse do not occur during the liquidation of the estate. In addition, the trustee may ensure that any liquidation costs are reasonable and that the debtor is not harassed by creditors.
The United States is not alone in appointing bankruptcy trustees to debtors. Canada, for example, has bankruptcy trustees. According to Canada’s Bankruptcy and Insolvency Act, a trustee is a person who is authorized to hold and distribute assets to creditors. In the United Kingdom and Australia, a trustee is also used. The trustee in those countries has the authority to notify creditors of the debtor’s assets, respond to creditor inquiries, investigate the debtor’s finances, and distribute liquidated assets in accordance with the laws of those countries’ Bankruptcy Acts.
The bankruptcy trustee in the United States has specific responsibilities under the Bankruptcy Code. If a debtor files for bankruptcy under Chapter 7 of the Bankruptcy Code, for example, the trustee will be in charge of the debtor’s assets. She may also call a meeting with the creditors and question the debtor about his or her assets. Once the assets have been assessed, the trustee may collect them from the debtor and sell them to generate cash. The trustee may then distribute the proceeds from the asset sale to various creditors in accordance with the Bankruptcy Code’s order.
If a person files for bankruptcy under Chapter 13 of the Bankruptcy Code, the bankruptcy trustee’s responsibilities are nearly identical to those of a Chapter 7 trustee, with the exception that she may also be in charge of the reorganization plans. She may be called to testify in court about the reorganization plan in those cases. She may also provide legal advice and assistance to the debtor in carrying out the reorganization plan. She may also make sure that the debtor follows the plan and makes the scheduled payments.