What does a Chapter 13 Trustee do?
After you work with your attorney to complete all of the necessary paperwork to file a Chapter 13 Bankruptcy, a Trustee will be appointed to oversee the administration of your plan.
The Chapter 13 trustee works for the United States Trustee and is an officer of the Department of Justice. One of their main functions in the process is to ensure integrity and efficiency in the process for all parties involved.
The trustee will review the paperwork that your attorney filed, assess the proposed repayment plan and compare it to bankruptcy laws, and then schedule a meeting of creditors where you and your attorney meet with creditors to discuss your plan.
The Chapter 13 trustee will be the person who collects your payments and distributes funds to your creditors.
What is the difference between a bankruptcy lawyer and Chapter 13 Trustee?
The main difference between a bankruptcy lawyer and bankruptcy trustee is that your attorney's main goal is to represent you and your assets, while a trustee’s role is to ensure a fair recovery and fair process for your creditors In short, your attorney is your only true advocate and while the trustee may at times serve in a more neutral capacity, the trustee does not have a responsibility to protect your best interests.
As someone seeking debt relief, you will rely on your lawyer to assess your financial situation and guide you to the best path out of debt. They will help you collect all the required information for bankruptcy proceedings and complete the paperwork necessary to file for a Chapter 13 bankruptcy. The preparation that goes into filing for bankruptcy is complex and arduous. Bankruptcy attorneys have helped hundreds, if not thousands, of people complete their filings and know how to efficiently complete the process.
Your attorney will then be by your side to represent your best interests throughout the rest of the Chapter 13 Bankruptcy process.
All bankruptcy cases in the United States are overseen by the federal government, which means you will have to file your case in federal courts with federal judges. A Chapter 13 trustee is a federally appointed official who is a separate entity from the courts. Although they do not offer legal advice, they are involved in the process to ensure bankruptcy laws are being upheld, review petitions, collect and distribute funds, and ensure a fair process for your creditors
Does a Chapter 13 Trustee check your bank account?
It is a common myth that a trustee in a Chapter 13 Bankruptcy will continuously monitor your bank accounts throughout the 3-5 year payment plan.
As you work with your attorney to file a bankruptcy, the Schedule A/B portion of the petition does require you to disclose the amounts of funds you have available in your bank accounts as of the date of the case filing. Generally, you will not need to provide copies of your bank statements. However, depending on the trustee appointed in your case your trustee may request to see your bank statements if he or she requires further verification of income, expense, or asset information.
Your assets will be protected in a Chapter 13 Bankruptcy. This is one of the most important objectives behind filing Chapter 13 Bankruptcy and an important reason to have an attorney guide you through the process.
Can I pay off my Chapter 13 Trustee early?
You may at some point find yourself with additional income and want to pay-off your Chapter 13 trustee earlier than your planned arrangement. While this may seem like a good idea, whether it can or should be done will be based on the specific Plan that was approved by the Court in your case and the amount and type of your debts. An early pay-off may not be your best option, hereis why:
- The only way to pay-off a Chapter 13 Plan early, prior to the Plan term (36-60 months) is to pay all debts in full. This may sacrifice debt reduction that would result if your Plan fulfills the full term.
- When a Chapter 13 Plan allows for a reduction of your debt this is based on the idea that the most you can afford to pay is less than the total debt you owe. If you have more money that would allow you pay more sooner the Court can require that you remit those additional funds to the Trustee and stay in the Plan for the full term (up to the point necessary to pay all debts in full).
So, you are agreeing to paying your trustee for a 3-5 year period and not a set overall dollar amount. Your creditors will argue that the funds you intend to use to pay off the plan should be used to increase your payment to creditors, not to shorten the duration of your Chapter 13 bankruptcy.
There are a few exceptions to this rule. If you are able to pay-off your creditors 100% in full, they will gladly take your payment early.
These exceptions are rare and difficult to navigate, so make sure you discuss your options with an experienced bankruptcy attorney.
How do I contact a Chapter 13 Trustee?
It is not advisable to contact the Trustee directly. Communications with the trustee should be done through your attorney’s office. While it is possible to contact a bankruptcy trustee directly, you really shouldn’t do so on your own. In fact, most trustees won’t discuss your filing if you are represented by an attorney. If you are contacting your trustee to discuss assets or expenses, the trustee may have follow-up questions. Your attorney will be better equipped to conduct these conversations with years of experience in bankruptcy law.
Get Help From a Trusted Bankruptcy Attorney
Acclaim Legal Services was established to do one thing: help our clients find lasting debt resolution and restored credit.
Calling us may be your first step towards finding financial freedom and peace of mind. At the free consultation, one of our experienced Chapter 13 lawyers will review your circumstances, outstanding debt obligations and future financial goals to provide you with an in-depth analysis and recommended next steps.
We are here to answer your questions and provide qualified legal advice. Don’t delay getting your credit and life back on track – call us today at 866-261-8282 or schedule a free consultation.