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One of the key features that separate a Chapter 13 bankruptcy case from other bankruptcy chapters is its use of a trustee in the payment process. In these cases, a trustee acts as a facilitator between the debtor and the creditors, and a debtor will make their bankruptcy payments to the trustee.
It is important for a debtor to be familiar with the role of a trustee before they file for Chapter 13 bankruptcy. A Chattanooga lawyer could explain a trustee’s significance in this process and ensure that a debtor is well-equipped to work with them after their bankruptcy petition is approved. Reach out to learn about the role of a trustee in Chattanooga Chapter 13 bankruptcy cases.
A Chapter 13 trustee’s main duty is to administer the debtor’s bankruptcy payment plan. They are officials appointed by a division of the Justice Department called the Office of the United States Trustee, which is divided into 21 regions around the United States and was established to guard against crimes such as bankruptcy fraud.
In Chapter 13 case, a debtor proposes a plan to pay creditors over three to five years. If the plan is approved by the court, the debtor will make payments to the Chapter 13 trustee who, in turn, distributes the money to the creditors.
It is the trustee’s job to examine the petitions and attachments and ensure that everything is consistent and orderly and that there is no fraud involved. They are meant to protect the creditor’s interests from fraudulent filings. If one of the parties is being dishonest, then they have the authority to take action to solve that issue.
The trustee is also charged with determining that the claims filed in the case are proper and that the debtor has proposed a viable plan and is devoting his or her disposable income to satisfying the debt. So, if a debtor is not making their payments, the trustee is the person who notifies them or their lawyer that they are in trouble.
Additionally, though a trustee cannot make official rulings in bankruptcy cases, they can offer recommendations and reports. These reports are often automatically signed off on by the judge, but it is possible for them to disagree. A local attorney could further explain a trustee’s role in the Chapter 13 bankruptcy process and the ways that they interact with the creditors and the court.
In these cases, a trustee may question a debtor in a hearing during the filing process to guard against any potential issues with their bankruptcy. They will check to see that the debtor has no preceding bankruptcy petitions that were dismissed. They will also ensure that all of the schedules and attachments to the petition are present and accurate, and will ask the debtor to provide:
More specifically, a trustee may require a certificate of credit counseling and a copy of any debt repayment plan developed through credit counseling, proof of payment from employers, a statement of monthly net income, and any anticipated increase or decrease in income or expenses after filing. They could also request any tax returns and a record of any interest the debtor has in federal or state qualified education or tuition accounts.
A debtor should adequately prepare for this hearing and have their lawyer with them during the questioning process.
A trustee holds an essential role in the Chapter 13 bankruptcy process, so you should be prepared to efficiently communicate with one if you are filing this kind of claim. A Chattanooga bankruptcy lawyer could ensure that you abide by their requests and create a payment program that both the trustee and the judge approve. Call today to schedule a consultation and learn more.