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Bankruptcy trustees have various duties depending on the type of bankruptcy. In the US, they oversee asset liquidation and creditor payments, while in Canada, the UK, and Australia, they distribute assets and investigate finances. Trustees can also help create and enforce reorganization plans and ensure debt repayment.
Depending on the type of bankruptcy, a bankruptcy trustee has many job duties. When a person files under Chapter 7 bankruptcy law in the United States, for example, the bankruptcy trustee will liquidate the debtor’s assets and turn them over to various creditors, following the rules of the state in which the debtor resides. Under Chapter 11 bankruptcy laws, a bankruptcy trustee can help create and enforce reorganization plans. If the debtor files chapters 12 or 13 of the US Bankruptcy Code, the bankruptcy trustee will oversee the repayment of the debt in accordance with the statutes and ensure that fraud and abuse does not occur when the property is liquidated. Additionally, the trustee can ensure that any costs related to liquidation are reasonable and that creditors do not harass the debtor.
The United States is not the only country that appoints bankruptcy administrators for debtors. For example, Canada also has bankrupt depositories. In Canada, a trustee is someone licensed to hold and distribute assets to creditors in accordance with the Bankruptcy and Insolvency Act of Canada. An administrator is also used in the UK and Australia. In these countries, the trustee can notify creditors of the debtor’s assets, respond to creditor inquiries, investigate the debtor’s finances, and distribute liquidated assets in accordance with the laws of the Bankruptcy Acts of those countries.
Under the Bankruptcy Code in the United States, the bankruptcy trustee has specific duties. For example, if a debtor files under Chapter 7 of the Bankruptcy Code, the trustee will oversee the debtor’s assets. Also, she can hold a meeting with the creditors and question the debtor about assets. After appraising the assets, the trustee can collect them from the debtor and convert them into cash by selling them. The trustee can then distribute the money earned from the sale of assets to multiple creditors, following the order specified in the Bankruptcy Code.
If a person files under Chapter 13 of the Bankruptcy Code, the bankruptcy trustee’s duties are almost the same as their Chapter 7 duties, except that they may also be responsible for reorganization plans. In those cases, she can appear and speak in court about the reorganization plan. She can also provide legal advice to the debtor and help him to follow the reorganization plan. Furthermore, she can ensure that the debtor makes the scheduled payments as per the plan.
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