When you file for a chapter 7 bankruptcy, your assets and debts are held in a kind of legal limbo during the process. To ensure that everything goes smoothly, a person known as the bankruptcy trustee is appointed to oversee your case. The trustee is in charge of several major functions and it's important for filers to understand their jobs and their compensation. Read on to learn more.
The Creditor's Meeting
This meeting is likely your only public appearance concerning your bankruptcy case. This meeting is known as the creditor's meeting because, in the past, filers had to explain to the people they owed money to why they couldn't pay it. Nowadays, creditors seldom appear at these meetings and they are more of a way of openly verifying the facts of your bankruptcy case under oath. Your trustee will question you about your case in general and verify that you signed the papers and were aware of the implications of it during this meeting.
The Home Inspection Visit
In some cases, the trustee may visit your home to notate, photograph, and get a preliminary value of your assets. The vast majority of bankruptcy cases never merit a visit, however. The potential to be inspected depends on how much personal property you have and how high your debts are. Since your property is subject to forfeiture when declaring a chapter 7 bankruptcy, the trustee has the right to take any non-exempt property, sell it, and provide the proceeds to your creditors. It's important to know that:
1. Property is scheduled to be seized at some future date but no property is ever seized the day of the inspection.
2. This is not a surprise visit – you will know about the visit several weeks in advance.
3. In some cases, the visit is carried out by a representative of the trustee instead of the trustee.
The Trustee's Compensation
The trustee's most important function is to liquidate a filer's assets to help pay off some of their debts. To that end, their compensation is actually based on how much they seize. The compensation model is based on a commission and they earn the following:
- 25% of the first $5,000 in seizures
- 10% of between $5,000 and $25,000
- 5% of anything over $25,000
- Trustees are paid a flat fee for all bankruptcy cases they administer regardless of any seizures as well.
- If you have questions about the job of the trustee in your bankruptcy, speak to a bankruptcy attorney, like Greg Dunn Bankruptcy Attorney.