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What Does the Bankruptcy Trustee Do?

After your bankruptcy case is filed, it is assigned a bankruptcy trustee. What does the bankruptcy trustee do? Depending on if the case is Chapter 7 or 13, the trustee will inspect your case for accuracy and compliance with Federal Law. In a Chapter 7 case, if there are assets to distribute, the trustee contacts creditors and distributes funds. In a Chapter 13 case, the trustee also receives your monthly payments and distributes money monthly to creditors.

Bankruptcy Trustee

What Information Does a Trustee Have Access To?

In short, just about anything they want. All debtors have a duty to cooperate with their trustee, and the trustee has power compel, through the courts if necessary, you to turn over all kinds of detailed financial records. I have seen trustees force debtors to produce YEARS of financial records. This doesn’t happen often. Trustees operate based on rules set out by the Department of Justice.

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What Information are You Required to Give to The Trustee?

In the Southern District of Ohio, there is a complete list of the documents debtors much provide, in advance, to the trustee in every bankruptcy case filed. These are court orders, called local rules. At a minimum, you’ll have to provide bank records, car titles, deed and mortgage, retirement account info, life insurance information, and at least 6 months of income proof, as well as tax returns. There could be more required of you once the trustee sees this information.

In my office we have an elaborate system of checklists and inspections to be sure we have all of this information. We carefully review it, to see if there is anything present that might create a problem for our clients. Sometimes we spot things that raise questions. You never want to go into the meeting with the trustee unprepared!

Does the Bankruptcy Trustee Check Your Bank Account?

Yes. The bankruptcy trustee will look at your bank account. And, what’s more, the trustees are beginning to dig deeper and deeper into bank records. They tell me that they are finding clues to assets that debtors may have sold, or money that has disappeared without a trace. This, of course, is not something that generally is good for a debtor. Ordinarily, the trustee will want to see the bank statement covering the month you filed your case in. This is the minimum. Increasingly, trustees want to see 6 months of bank records. Sometimes this leads them to want to see 6 to 12 months of credit card statements. Do you see where this can lead?

Do Bankruptcy Trustees Investigate?

Yes, that’s their job. Normally, there nothing to find. If there is some asset that you have, or an account with money in it, you should fully disclose this to your bankruptcy attorney. An experienced bankruptcy attorney can usually tell you if there is a problem. And, if there is some risk that the asset or account might be taken by the bankruptcy trustee, there are often ways to fix this. Exemption planning is an important part of representing consumers so that they get the best results in bankruptcy, and don’t have problems with the trustee. Richard West has been helping clients appear before trustees since 1986. He’s personally helped thousands of consumers to wipe out their debts, keep their property safe from trustees, and recover good credit in record time.

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Useful Calculators

Here are two helpful calculators for managing your debt repayments and Chapter 13 commitments.