Bankruptcy is an important legal tool that provides protections for struggling consumers.
The bankruptcy court is closely involved in guiding the bankruptcy process which is why it is helpful for the filing party to be familiar with what the bankruptcy trustee does and what they can expect from the bankruptcy process.
It is important to keep in mind that there are different types of personal bankruptcy protections available to struggling consumers. The bankruptcy trustee’s role differs based on the type of bankruptcy protection the struggling consumer has filed for. In a Chapter 7 bankruptcy, because it is a liquidation bankruptcy, the bankruptcy trustee is involved in selling the filing party’s non-exempt assets to repay creditors. The trustee will also challenge claims of creditors if needed. In addition, if grounds exist to challenge the bankruptcy discharge, the trustee is the party that objects.
On the other hand, because a Chapter 13 bankruptcy involves the reorganization of the struggling consumer’s debts, the role of the bankruptcy trustee is different. The bankruptcy trustee will review the filing party’s repayment plan worked out with the help of the bankruptcy court and present any objections. The trustee will then receive and collect bankruptcy payments and distribute them to repay creditors. Whatever process the filing party chooses, the bankruptcy trustee will play an important role the filing party should understand and the debt discharge is the last step in the process.
Because there are different types of bankruptcy protection available for struggling consumers to consider, it is helpful for them to be familiar with the different options and how they can help address their particular needs and concerns for the process. Knowing how the bankruptcy court can help with those concerns, and the important role of the bankruptcy trustee during the bankruptcy process, is also valuable information for filing parties to have.