If you’re facing bankruptcy in Texas, a trustee will be part of the process. It’s important to understand the role of the bankruptcy trustee and how this person can affect the outcome of your case.
What is a bankruptcy trustee?
A bankruptcy trustee is an individual who is responsible for handling the bankruptcy filer’s estate. A trustee is appointed by either the United States Department of Justice or by the creditors involved in the specific case.
The bankruptcy trustee’s exact responsibilities vary depending on the type of bankruptcy being filed. In Chapter 7 bankruptcy, the trustee oversees the liquidation of the filer’s property. This means that the trustee evaluates the person’s estate and determines the value of the assets. He or she then sells all non-exempt property to help pay off creditors.
In a Chapter 13 bankruptcy, the trustee is responsible for holding your funds in safe keeping until your proposed repayment plan is approved by the court. The trustee also oversees the meeting with creditors that is required under Chapter 13.
In both types of bankruptcy, the trustee reviews the documentation, verifies the information and calculations, and conducts an interview with the filer under oath. This interview is designed to verify the financial information given in order to prevent errors and fraud.
How is a bankruptcy trustee paid?
The bankruptcy trustee is paid a commission that comes out of the sale of filer’s nonexempt assets.
The commission is paid on a sliding scale as follows:
- 25% of the first $5,000 disbursed;
- 10% of the next $45,000 disbursed;
- 5% of the next $950,000; and
- 3% of anything over $1,000,000.
Bankruptcy is a complicated legal matter with many rules and regulations; the trustee is only one part of the process. It’s highly recommended that you seek the advice and representation of a Dallas attorney who has experience with bankruptcy cases in Texas to help keep all components running smoothly.