The Role of the Trustee in a Bankruptcy


The filing of a bankruptcy petition causes the formation of an estate. This estate becomes the temporary legal owner of the debtor’s property. The Trustee administers this estate. The Trustee’s role is to determine if there are assets to liquidate, to review claims of exemptions, and the debtor’s entitlement to a discharge. The Trustee is a representative of the creditors as a whole to protect their interests. The Trustee can file objections to claims of exemption or discharge. The Judge makes the final decision on these objections.

The Trustee in an asset case liquidates the debtors non-exempt assets in a manner that maximizes the return to the unsecured creditors.

The Trustee pursues any pending lawsuits to the benefit of the estate. The Trustee may bring action in Court to recover assets belonging to the estate. He may bring action to recover preferential payments made to creditors 90 days before filing your petition. The Trustee has the power to bring action in Court to undo security interests and other pre-petition transfers of property that were not properly perfected under non-bankruptcy law at the time of the petition. The Trustee has the power to pursue non-bankruptcy claims, such as fraudulent conveyance and bulk transfer remedies available under state law.

After liquidating all the assets in the case to the benefit of the creditors; the Trustee will seek Court approval to pay the Claimants in the estate according to the order set forth in the Bankruptcy Codes. After approval from the Court the Trustee will pay the Claimants in the estate and will bring action in the Court to close the case.