Bankruptcy Trustees: Who are they and what do they do?

Dustin Thomas Bower

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Chapter 7 Bankruptcy Attorney

Contributor Level 9

Posted almost 5 years ago. 1 helpful vote

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1

Where does the trustee come from, and what rights are granted to him in your case?

Appointment of a trustee Immediately upon the filing of your bankruptcy, an interim trustee is appointed to your case. This trustee is a disinterested person selected from a panel of private trustees. If no disinterested person is available in the panel of trustees, then the US trustee will take over. At the meeting of creditors, the creditors may decide that they wish to elect another person as the trustee. This trustee must be voted in by a majority of the voting creditors. The bankrupt person has no say in the choice of the trustee. If no trustee is voted in, then the interim trustee remains with the case.

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Duties of the trustee

According to 11 U.S.C. 704, the trustee shall: * Collect the property of the estate and reduce it to money, as well as close the estate as quickly as possible in keeping with the best interests of all parties involved * Be accountable for all property received * Ensure that the debtor files a statement of intention with respect to the retention or surrender of the property * Investigate the financial affairs of the debtor * If needed, examine proofs of claims and object to the allowance of any claim that is improper * If advisable, oppose the discharge of the debtor * Unless the court orders otherwise, furnish such information concerning the estate and the estate's administration as is requested by a party in interest

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Duties of the trustee (con't)

* If the business of the debtor is authorized to be operated, file with the court, with the United States trustee, and with any governmental unit charged with responsibility for collection or determination of any tax arising out of such operation, periodic reports and summaries of the operation of such business, including a statement of receipts and disbursements, and such other information as the United States trustee or the court requires * Make a final report and file a final account of the administration of the estate with the court and with the United States trustee

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Liability of the trustee

The trustee stands in the place of the bankrupt, and the property in the trustee's possession is subject to all the equities impressed upon such property in the hands of the bankrupt. The trustee has a duty to protect that property to the best benefit of the creditors. The trustee is not held liable on a claim against the bankrupt person, and is bound to pay all taxes owed by the bankrupt. The bankruptcy act provides that the trustee is not personally liable for any penalties or forfeitures incurred under the act by the bankrupt for whose estate they are entrusted. However, the trustee is not fully immune: he may still be held liable for a breach of trust.

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