When you file for Chapter 7 bankruptcy, the court appoints a bankruptcy trustee to oversee and administer your case. Although there are technically different parties involved in your filing, none of them have a greater impact than your trustee. Therefore, their powers and responsibilities are important for you to understand.
Here are four things you should know about your Chapter 7 trustee and their duties.
They review your bankruptcy petition for accuracy.
Filing for Chapter 7 requires you to complete a bankruptcy petition and submit personal and financial information about your debts, finances, income, and assets. Your trustee is required to review the petition and verify the information using documents like pay stubs, bank account statements, and receipts. For example, if you say you make $2,000 a month and your bank records show $3,000 worth of direct deposits from your employer, the trustee will investigate further.
They question you at the 341 meeting of creditors.
Soon after filing, you are required to attend the 341 meeting of creditors. Although your creditors are permitted to ask you questions, the truth is that unless the circumstances are unusual (e.g. you are believed to be concealing assets) they likely will not attend the meeting. It is your bankruptcy trustee who will ask you questions about the information you provided in your petition and documentation.
They are empowered to sell assets
Chapter 7 trustees are empowered to seize all debtor property that is not protected by an exemption, sell it, and distribute the proceeds to your creditors. In Texas you have your choice of using state or federal exemptions, so the option you go with will impact which assets you can protect. In general, your home, household goods, clothing, and certain retirement accounts are safe from seizure.
Some debtors have no assets that are nonexempt: if this happens to you, your trustee will advise your creditors that there will be no distribution due to your case being a ‘no asset’ one.
They can undo preferential transfers
If you paid back certain creditors (such as friends and family members), paid too much to a creditor, or transferred any of your property to another party prior to filing for Chapter 7, your trustee has the power to undo these transfers and get the property or money back to distribute it to your creditors. For this reason, it is important to avoid such transactions in the months leading up to your filing.
When you are struggling with debt you can never repay in a reasonable time period, Chapter 7 bankruptcy allows you to discharge unsecured debts such as credit card bills and medical debt and start over. For more information about filing for Chapter 7 in Texas, contact Fraser, Wilson & Bryan, P.C. We have helped many consumers get a second chance at financial solvency, and are here to do the same for you.
