The Bankruptcy Court appoints a bankruptcy trustee to your case after your bankruptcy petition is filed. The Trustee’s job is to find unprotected assets that the trustee can seize and sell to pay your unsecured creditors. The Trustee is on your creditors’ side, not yours. The Trustee Conducts the 341 Meeting of Creditors. The Trustee can file an Adversary Proceeding against you and refer your case to the Department of Justice for criminal prosecution if you have committed fraud.
The Purpose of the Bankruptcy Trustee
Many mistakenly believe that the Trustee is like a judge, acting as an impartial overseer of your case. The opposite is true. The Trustee acts as an agent of your creditors and earns a commission for any of your property that can be seized and sold to pay debts held by your creditors. The Trustee is on your creditors’ side. Your bankruptcy attorney is the one who is on your side.
The Trustee Conducts the 341 Meeting of Creditors
About a month after your bankruptcy petition is filed with the court, you will attend a 341 meeting of creditors. This meeting is usually held at the Bankruptcy Court. At the start of this meeting, the Trustee will ask you to raise your right hand and be sworn under oath to testify truthfully. The Trustee will verify your identification, review your documents, and question you to determine if your petition and schedules are accurate and complete. The Trustee will also question you to determine whether any of your assets are unprotected (property that can’t be protected by a bankruptcy exemption) and can be sold to pay your creditors. After the Trustee has finished questioning you, your creditors are permitted to question you as well, usually about debts secured by your assets.
If you don’t provide truthful answers to the Trustee’s questions, the Trustee may reschedule the 341 Meeting to another date and require you to provide appropriate documentation. The Trustee may send your case to the United States Trustee's office in the US Department of Justice for criminal prosecution if the Trustee believes you have committed fraudulent activity, such as being untruthful or hiding assets from the trustee by omitting them from your bankruptcy petition.
If the Trustee determines that one of your debts is non-dischargeable in bankruptcy, such as being incurred through fraud, the Trustee may initiate an “adversary proceeding,” which is a lawsuit filed against you in your bankruptcy case, to challenge your right to discharge that debt. The Trustee may also initiate an adversary proceeding to object to your bankruptcy discharge if you committed fraud, and to void a fraudulent transfer of your property to another person if you did it to keep that property from the Trustee.
Asset Seizure of Your Property
When you file bankruptcy, legally, everything you own belongs to what is called the “bankruptcy estate.” If the Trustee finds nonexempt assets and wants to seize them, the Trustee can offer you a choice. Either the Trustee will take action to seize your property, or you can “buy back” that property from the bankruptcy estate. If you opt to buy your property back, the Trustee will usually set up a payment plan for you.
If the Trustee finds unexempt assets that aren’t worth enough to pursue seizure, the Trustee may abandon those assets from the bankruptcy estate, meaning you still get to keep them. Some examples of abandoned assets are older vehicles, used furniture, appliances, electronics, and other low value items. These are not worth the Trustee’s time and expense to pursue them.
Contact Starks Law Debt Defense Attorneys to Learn More About Chapter 7 Bankruptcy Relief
If you need debt relief or have questions about Chapter 7 bankruptcy relief, contact us at Starks Law P.C. for a free consultation with an attorney. We listen to the needs and goals of every client and create a legal strategy tailored to that person and their case. We do not believe in the 'one size fits all' legal strategy employed by other firms. Every case is unique, and we plan accordingly.
Representation from Starks Law begins with a simple phone call. We will review the circumstances surrounding your unique situation. After assessing the details, we will form an action plan tailored specifically for your case and goals. Additionally, we will do our best to answer any questions you may have so that you can make a fully informed decision on how to proceed. Take advantage of our Creditor Lawsuit Defense services.