From the time you first make the decision to file for bankruptcy until the final discharge months later, your bankruptcy will proceed in a fairly predictable manner. The steps towards the final discharge are overseen by a court-appointed official; the trustee. While sometime these officials are sitting or former judges, in some jurisdictions they are attorneys with bankruptcy experience. It's helpful to understand the important part the trustee will play in your bankruptcy, so read on for more information.
The Creditor's Meeting
Once your bankruptcy as been filed, you will be scheduled to attend the creditor's meeting, sometimes called the 431 meeting. The trustee will be presiding over the meeting, in which you will be questioned about your financial situation. Your contact with the trustee during this meeting will likely be brief and uneventful; merely a formality. In rare cases, one of your creditors will attend the meeting to protest their inclusion in your bankruptcy petition or to ensure that you intend to keep paying a particular debt in order to keep the property (called reaffirming the debt). If issues arise during the creditor's meeting, another meeting will be scheduling for a future date.
Seizing Property
The primary duty of a trustee is to ensure that any non-exempt property available for seizure is taken and sold for the benefit of your creditors. Often, either the trustee or a representative of the trustee will schedule an appointment to visit your home or other property locations to ascertain the presence of non-exempt property and its value. It's important to note that no property is actually seized at this time, but photographs and notes will be taken. Arrangements for surrender of any non-exempt property will be made at later date.
The Trustee's Compensation
The interest the trustee takes in your case is in direct proportion to the likelihood that you have valuable property that may be seized to help pay your creditors. In fact, the trustee's compensation is based on a commission of that property seized. Federal law (to which bankruptcy cases are assigned) allows the trustee to earn a commission of 25% on the first $5,000.00, 10% for between $5,000.00 and $50,000.00 and 5% for $50,000.00 to $1,000,000.00.
The trustee is truly a key player in your bankruptcy process, but normally your interactions are limited to one or two meetings. If you have been honest about your property and debt, you should have nothing to fear. Your unease about your contacts with this official can be lessened considerably with your attorney's help and reassurance and soon you will be on your way to a much better financial future.
