If you’ve read a little about chapter 13 bankruptcy, you may have heard about the trustee. But what is the trustee’s role in a chapter 13?
Bankruptcy can be a challenging and overwhelming process for individuals facing financial difficulties. However, Chapter 13 bankruptcy offers a structured and viable solution to reorganize debts and regain financial stability. At the heart of this process is the trustee.
Chapter 13 bankruptcy allows debtors to develop a repayment plan spanning three to five years, which enables filers to retain their assets while working towards repaying their debts in a structured manner.
Upon filing for Chapter 13 bankruptcy, a trustee is appointed to oversee the case. One of the primary responsibilities of the trustee is to review the debtor’s proposed repayment plan. This entails scrutinizing the plan’s feasibility, ensuring it adheres to legal guidelines, and determining whether it offers fair treatment to creditors. The trustee examines the debtor’s income, expenses, and debt obligations to assess the plan’s viability and whether it meets the “best interests of the creditors” test.
Once the plan is approved by the court, the trustee assumes the crucial responsibility of collecting payments from the debtor. Debtors make regular payments to the trustee, who then distributes the funds to creditors according to the terms of the approved plan. This system streamlines the payment process, ensuring that creditors receive their designated share of the debtor’s disposable income. The Trustee also has a duty to uphold the principles of fairness and transparency, to ensure the credibility of the bankruptcy process is maintained.
If you have any questions about how a chapter 13 bankruptcy works, or if you think you may benefit from a bankruptcy, reach out to our office today.
Ravosa Law Offices, PC 