What Are The Chapter 13 Bankruptcy Trustee's Duties?

Posted by Wesley Scott on December 17, 2018 at 10:33 AM
Wesley Scott

I have often described Chapter 13 Bankruptcy like a “government sponsored debt consolidation plan”, because that is what it is. In simple terms, the function of a Chapter 13 trustee is to collect funds from debtor(s) and disburse those funds to debtor(s)’s creditors based on an approved plan. Now, the trustee must examine the schedules, and the plan, to make sure the proposed plan complies with all legal requirements under the law. If the plan does not, the Chapter 13 trustee’s job is to object to debtor’s plan until it does.

Section 1302 of the Bankruptcy Code more fully outlines the duties of a Chapter 13 trustee. The trustee has a duty to examine the schedules and debtor(s) to make sure the information on the schedules in true and complete. That all assets are listed on the schedules and debtor’s debts are correctly listed as well.

With respect to the proposed plan, the Chapter 13 trustee must make sure debtor’s income is accurately stated and that debtor’s expenses are reasonable and necessary. On the flip side of this, trustee must make sure debtor’s plan is feasible as well. In other words, can debtor(s) really afford to make these plan payments proposed or is the plan not feasible, not affordable.

While part of the function of a Chapter 13 trustee is to protect creditors, the Chapter 13 trustee’s job is also to “assist” the debtor in reorganizing as well- and getting back on their feet. The latter function is sometimes lost on Chapter 13 trustees. Their job is not to bleed every nickel out of debtor they can, but to approve a plan that meets the legal requirements of Section 1325 of the Bankruptcy Code.

 

Topics: Chapter 13 Bankruptcy, Bankruptcy Trustees