Is It Possible to Request a New Bankruptcy Trustee?

People often view bankruptcy as a last resort and are hoping that their financial situation will improve. The creditors may have already turned your account over to a collection agency that has started a barrage of harassing or even intimidating phone calls. Once you file your bankruptcy petition, the federal court issues an automatic stay, protecting you from further phone calls, threatening letters, possible wage garnishment or any other type of adverse action. Whether you file Chapter 7 or 13, understanding what does a bankruptcy trustee is important to know, as they will be in charge of your case.

The Duties of a Bankruptcy Trustee

The federal bankruptcy court will assign a trustee to oversee the case and they will be put in charge of the debtor’s estate. Their responsibilities also include the following:

• In a Chapter 7 case, the trustee will sell off any non-exempt assets and distribute the proceeds to the creditors. While they only receive a nominal fee for their services, they are entitled to a commission on all of the assets that are sold.

• The trustee’s role in a Chapter 13 reorganization case is much larger. They must review the repayment plan to make sure that the debtor will be able to financially follow it. Once the bankruptcy court approves the plan, the petitioner will send a monthly payment to the trustee who will then distribute funds among the creditors. A Chapter 13 case can take anywhere from three to five years to complete and the trustee earns a percentage of the money collected during this time.

The bankruptcy trustee is supposed to be overseen by the U.S. Trustee to ensure that all cases are being handled according to the federal laws.

Reporting Bankruptcy Trustee Misconduct

The U.S. Trustee Program is part of the Department of Justice (DOJ) that oversees the administration of cases and can intervene in court to enforce the bankruptcy laws. The United States Trustee appoints bankruptcy trustees and acts as the watchdog over each case. The most common reasons why a bankruptcy trustee can be removed from a case include:

• The trustee has a conflict of interest with either the creditor or debtor
• Misconduct by failing to follow the federal rules of bankruptcy procedure
• Fraudulently using the debtor’s assets for their own personal gain

In bankruptcy cases where abuse or fraud is suspected, they can recommend to the U.S. Attorneys General Office and the Federal Bureau of Investigation (FBI) that legal action be taken against those responsible for misconduct. To report unlawful conduct by a trustee, you can prepare a written summary outlining the specifics of your case and send it to the Criminal Enforcement Unit of the Executive Office for U.S. Trustees in Washington D.C.

Pursuing Legal Remedies

When you file a bankruptcy petition, there are strict rules that must be followed. If you fail to list one of your creditors on the petition, you could end up owing thousands of dollars. By hiring a bankruptcy attorney, these professionals will make sure that all of the paperwork is properly filled out and explain what to expect during the entire process. Once a trustee is assigned to your case, it is important to know what to look for in cases of trustee misconduct or fraud. If you suspect there is wrongdoing on the part of the trustee, contact your lawyer immediately so that they can intervene on your behalf.