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Orange County Lawyers Discuss the Role of The Chapter 7 Trustee

The Chapter 7 Trustee in each case is chosen from a panel of Trustees serving the district where the bankruptcy was filed. The duties of said Trustee are largely set forth in Code Section 704, and include:

  • Presiding over the Section 341 Meeting, and reviewing the documents, which the debtor is required to provide.
  • Collecting property of the estate.
  • Where appropriate, invalidating and recovering certain fraudulent transfers and preferential transfers made by debtor.
  • Where appropriate, objecting to improper exemptions claimed by debtors.
  • Where appropriate, objecting to the debtor being granted a Discharge.
  • Examining the Proofs of Claim filed by creditors and interested parties, and objecting to such claims where appropriate.
  • Liquidating (i.e. reducing to cash) any non-exempt property and distributing the proceeds thereof to creditors with valid, timely filed claims.
  • Making and filing a final accounting with the Court and with the United States Trustee.
  • Ensuring that the debtor carries out the stated intention with regard to secured property, although the actual enforcement of this duty is somewhat problematic.
  • Where appropriate, sending certain statutory notices to the recipients of alimony or child support from the debtor.
  • Investigating the financial affairs of the debtor.
  • Furnishing such information concerning the bankruptcy estate and its administration as is reasonably requested by parties in interest.

Contrary to the belief of many creditors, a Chapter 7 Trustee is not mandated to make a debtor’s life as miserable as possible in order to amuse those creditors seeking retribution. The Trustee is also not a judicial officer with power to resolve disputes between the debtor and interested parties. The Trustee is simply a party with equal status to other parties interested in the outcome of the case. The Trustee may sue or be sued in his representative capacity to determine claims made by or against the bankruptcy estate, and enjoys no exalted status when a litigant in such matters.