Chapter 13 bankruptcy allows people to consolidate and manage their surmounting debts. Unlike Chapter 7 bankruptcy, commonly known as “liquidation bankruptcy,” Chapter 13 focuses on creating a structured repayment plan. This form of bankruptcy helps individuals keep their assets while paying off debts over time. However, a trustee is still involved in the Chapter 13 process despite not liquidating assets. But what is the trustee’s role in Chapter 13 bankruptcy, you may ask? Let’s explore this crucial role.
Oversee the Repayment Plan
As stated above, Chapter 13 bankruptcy involves a repayment plan that ultimately eliminates the filer’s debts within three to five years. But who ensures that the filer makes their payments, especially when the person filing may have had issues with timely payments in the past? That would be the court-appointed trustee.
The court-appointed trustee reviews the proposed plan by the debtor to the courts and ensures that it meets the criteria and legal requirements set in place by bankruptcy laws. In the review phase, a trustee may request further information from the debtor to verify certain details, such as income, assets, and expenses. The ultimate goal of the trustee during the review is to ensure that the plan is fair for all parties involved, including the debtor and the creditors.
If an issue is identified in the proposed plan during the review stage, the trustee may object to its confirmation and recommend more suitable modifications. They ensure your proposal is viable and fair before it is confirmed by the bankruptcy judge.
Collecting Payments
Once your repayment proposal plan has been approved by the trustee and confirmed by the judge, the trustee then takes on the role of collecting the payments. Traditionally, these payments are collected on a monthly basis and have been adjusted to fit the debtor’s income status and the terms of the repayment plan.
It is vital to note that despite the trustee’s position of oversight, they are a neutral party and do not side with the creditor or the debtor. It is simply their duty to ensure that the agreements made within the plan are being met and the law is being followed.
Distributing Funds to Creditors
After collecting payments from the debtor, the trustee is responsible for distributing these funds to creditors according to the terms of the repayment plan. The trustee ensures that each creditor receives their fair share of the payments, helping to resolve the debtor’s financial obligations efficiently and fairly.
Why You Should Hire a Local Bankruptcy Lawyer
Navigating the complexities of Chapter 13 bankruptcy can be daunting, and having the right guidance is crucial. A local bankruptcy lawyer can provide invaluable assistance by explaining your rights and obligations, helping you prepare and file necessary documents, and representing you in court.
A qualified lawyer, such as Adam M. Freiman, is who you need for your bankruptcy filing. With their decades of expertise, you can feel confident that your case is being handled with the utmost care. Did you also know that Adam oversees and represents every case that he takes on? You can say goodbye to endless talks with paralegals, Adam is here to help you with your bankruptcy case personally.
