Written by attorney Brian David Lerner

Chapter 13 Trustee’s Powers

The Chapter 13 Trustee can Assume or reject executory contracts and unexpired leases. With court approval, a Chapter 13 trustee may employ at the expense of the estate “disinterested" attorneys, accountants, appraisers, auctioneers and other professional persons to assist in the performance of the trustee’s duties. A Chapter 13 trustee has standing to object to improper proofs of claim. Although Chapter 13 trustees have the authority to object to claims, they rarely do so. Because the source of creditors’ recovery in Chapter 13 cases is the debtor’s postpetition earnings (not assets from the bankruptcy estate), only the Chapter 13 debtor stands to gain or lose from efforts to pursue a bankruptcy estate cause of action; thus, the trustee’s participation is not needed to protect the creditors’ rights. Most courts have held that a Chapter 13 trustee can exercise the avoiding powers available to a Chapter 7 trustee. The Chapter 13 trustee has standing to avoid fraudulent transfers

The Chapter 13 trustee has standing to avoid the fixing of certain liens that impair the debtor’s exemptions. With or without court approval, the Chapter 13 trustee may prosecute or defend any pending action by or against the debtor, or commence and prosecute any action on behalf of the estate. The trustee may request postconfirmation modification of a confirmed plan. A Chapter 13 trustee may deposit or invest estate money so as to yield the maximum net return, taking into account the safety of the deposit or investment.

The Chapter 13 trustee does not have the power to do any of the following:

No power to abandon estate property:

The Chapter 13 trustee does not have the power (or duty) to abandon property of the Chapter 13 estate. The Chapter 13 trustee cannot use, sell or lease property of the estate. The Chapter 13 trustee is generally not authorized to operate the debtor’s business. The Chapter 13 trustee is not authorized to obtain credit or incur debt.

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