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Bankruptcy is a legal remedy for those unable to afford payments on the debt they've accrued. It’s available for both businesses and individuals. Personal bankruptcy is permitted under two chapters—Chapter 7 and Chapter 13—of the United States legal code. Whichever the type, a trustee is named to help guide the proceedings. Here’s a closer look at the role bankruptcy trustees play in the proceedings.

What Is a Bankruptcy Trustee?

During a bankruptcy proceeding, the debtor's estate—meaning all the debtor's personal and real property—becomes a legal entity separate from the debtor. The trustee acts as a representative of this entity and, supervised by a judge, oversees the proceedings and performs any duties required by the court.

These duties depend on the type of case and the relevant chapter. Since 1978, trustees have been chosen by the United States Trustee Program, a branch of the Justice Department. 

What Does a Bankruptcy Trustee Do Under Chapter 7?

bankruptcyChapter 7 or liquidation bankruptcy requires a debtor to liquidate all non-essential assets and repay as much debt as they can immediately. Unpaid debt is then discharged.

Debt relief occurs in a matter of weeks or months. Under Chapter 7, the trustee is responsible for the organization and sale of assets and the subsequent repayment of creditors. If appropriate, the trustee can object to the discharging of certain debt or challenge a creditor's claims.

What Does a Bankruptcy Trustee Do Under Chapter 13?

Chapter 13 or restructuring bankruptcy is for people with a steady source of income who can repay their debt but need a lower monthly payment. The trustee reviews the debtor's proposed plan to make sure it is affordable and fair. They also receive payments from the debtor and remit payments to the creditors. 

 

If you've considered filing for bankruptcy but need legal guidance, contact Lein Law Offices in Hayward, WI. With a second location in Winter, WI, the firm has compassionately served Sawyer County since 1983. In addition to bankruptcy, they also specialize in estate planning and real estate law. Visit their website to read what their clients have to say about them or call (715) 634-4273 to arrange a consultation.

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