Chapter 13 bankruptcy can be a good solution for someone with income or assets that has more debt than they can manage. Unlike Chapter 7 bankruptcy, the person filing won’t need to sell their property to repay creditors. However, they will have to complete a repayment plan before the court will order their discharge.
One aspect of Chapter 13 bankruptcy that is different from Chapter 7 bankruptcy is the appointment of a trustee. The court will name a professional to oversee your Chapter 13 bankruptcy filing. What exactly does the trustee do during a bankruptcy filing?
The trustee organizes and manages the creditor meeting
When you file for Chapter 13 bankruptcy, you agree to spend several years partially repaying your unsecured debts with a court-structured repayment plan. The person filing needs to notify their creditors and then attend a meeting.
Both the creditors and the trustee will ask the person questions during that meeting. The goal is to negotiate terms for the repayment plan.
The trustee oversees the repayment plan as well
Chapter 13 bankruptcy makes meeting your financial obligations to creditors a little bit easier. Rather than making payments to all of your creditors throughout the month, you only need to make a single payment directly to the courts. The trustee records the payment and distributes it as arranged to the individual creditors.
Overall, while the trustee may ask you some difficult questions during your creditor meeting, their role is largely organizational. They also help manage the whole process so that you have less to keep track of as you move toward your bankruptcy discharge.
