With so many Americans filing for bankruptcy nowadays, it's easy to understand how there are so many myths floating around on the Internet. Many people filing bankruptcy live in fear and worry of coming up to the 341 meeting or the meeting of creditors. There is this idea that the bankruptcy trustee is an angry monster intent on taking away all your stuff. In actuality, this is far from the truth.
When a person files a Chapter 7 or Chapter 13 bankruptcy, the court will appoint a trustee to administer the case. Usually, this person is an attorney that works for the Department of Justice as an independent contractor. It is not required for the trustee to be a licensed attorney to oversee bankruptcy cases. The bankruptcy trustee is responsible to review the bankruptcy petition and look for any discrepancies that might lead to questions at the 341 meeting. At the time of the 341 meeting, or the meeting of the creditors, the bankruptcy trustee will question the debtor on information that is relevant to their filing. During this meeting the debtor might be required to produce documentation supporting their bankruptcy petition.
When an individual is filing a Chapter 7 bankruptcy, the main goal of the trustee is to look for nonexempt assets. If assets are found that aren't protected under exemption laws and can be easily sold, the trustee can recover the property from the people filing bankruptcy and sell the items to disperse the proceeds amongst the creditors. Trustees are usually very fair with the debtors and offer alternatives if they are available. You have to remember, it's no fun for the trustee to gather up a bunch of household items and take them to the swap meet on a weekend for a few bucks. In a Chapter 7 bankruptcy, the trustee is paid $60 for every bankruptcy they administer, along with a percentage of any property they can recover and sell.
The goals of the trustee are much different in a Chapter 13 bankruptcy. Their basic job in a Chapter 13 is to figure out how much can a debtor afford to pay the creditors in the court ordered payment plan. The debtor's bankruptcy attorney will propose their idea of what is fair when it comes to income and expenses for their client. The trustee will closely review the proposal before it is submitted to the court. In a Chapter 13 bankruptcy the trustee is paid a percentage of the monthly payment to administer the case.
Although the process of filing bankruptcy can seem intimidating, there is really nothing to worry about as long as you tell the truth and are honest with the trustee. It's very helpful to have a bankruptcy attorney on your side, as most of them have personally worked with different trustees and know them well and what's expected of the debtor to have a successful discharge.
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