Bankruptcy Alphabet - TIn bankruptcy, nobody is more important to the success of your case than the trustee. He or she can help you get through, or can make your life hell. In this episode of the bankruptcy alphabet, I present to you the trustee.

The trustee is not a judge. He or she may not even be a lawyer (though most are, it’s not a requirement). In fact, the trustee doesn’t even work for the court – he or she works for the Office of the U.S. Trustee, which is a subdivision of the U.S. Department of Justice.

The bankruptcy trustee is required to administer your case. That’s because, when your bankruptcy case is filed all property leaves your ownership and is owned by an estate. Think of it like the estate of a dead person; it’s a fictional, though legal, person that takes control over your property.

In Chapter 7, the trustee becomes the owner of all property that isn’t exempt. In a Chapter 13, the he or she is the one who receives your Chapter 13 Plan payments and apportions it to your creditors.

The primary role of the bankruptcy trustee is to conduct the meeting of creditors and review your bankruptcy schedules. You’ll need to produce a raft of paperwork as well.

In a Chapter 7 bankruptcy, the trustee will take all non-exempt assets and turn them into cash. That money will be divided up among your creditors according to their legal priority after they each file claims with the court. If a claim isn’t up to snuff, it’s the trustee’s job to object and straighten out the mess.

In a Chapter 13 case, this is the person who review your Plan to see if it is in line with the law and rules. From there, he or she will make a recommendation to the bankruptcy judge as to whether the Plan should be confirmed. Money gets sent to this person, who distributes it to your creditors.

In the end, this is a key functionary in the process of ending your bill problems.  But make no mistake – this is not the ultimate arbiter of your fate.  Produce documents, be honest and cooperative – but don’t be fearful.  If there’s a disagreement then it’s up to your lawyer to bring it to the judge, who is the only one who can make a final decision.

Image credit:  Leo Reynolds