Filing for bankruptcy is a significant financial decision that involves multiple steps and parties, including the bankruptcy trustee. The trustee plays a crucial role in the bankruptcy process, acting as an impartial administrator responsible for overseeing the case.
One of the trustee’s primary duties is to investigate various aspects of your financial situation to ensure the bankruptcy process is fair and in compliance with the law. Understanding what the bankruptcy trustee investigates can help you prepare for the process and alleviate some of the stress associated with it.
What should you know about the bankruptcy trustee?
Role of the Bankruptcy Trustee
Before diving into the specifics of what the trustee investigates, it’s important to understand the trustee’s role. The trustee is an individual appointed by the bankruptcy court to manage your bankruptcy case. In Chapter 7 bankruptcy, the trustee’s role is to liquidate non-exempt assets to pay creditors. In Chapter 13 bankruptcy, the trustee oversees the repayment plan and ensures that payments are distributed to creditors according to the court-approved plan. Regardless of the chapter under which you file, the trustee’s primary responsibility is to ensure that the bankruptcy process is carried out fairly and lawfully.
What Does the Bankruptcy Trustee Investigate?
The trustee conducts a thorough investigation of your financial situation to confirm the accuracy of the information provided in your bankruptcy petition and to identify any potential issues. Here are the key areas that the trustee typically investigates:
Accuracy of Your Bankruptcy Petition
The first area of investigation is the accuracy and completeness of your bankruptcy petition and schedules. The trustee will review all the documents you’ve submitted, including your list of assets, liabilities, income, and expenses. They will look for any discrepancies or omissions that could indicate dishonesty or an attempt to hide assets. It’s essential to be thorough and honest in your disclosures, as any inaccuracies could lead to serious consequences, including the dismissal of your case or potential criminal charges.
Identification of Non-Exempt Assets
In a Chapter 7 bankruptcy, the trustee investigates your assets to determine which ones are non-exempt. The trustee can liquidate these assets to pay creditors. Non-exempt assets might include items such as:
- Real estate
- Vehicles
- Jewelry
- Other personal property that is not protected by bankruptcy exemptions
The trustee’s goal is to maximize the return to creditors, so they will carefully evaluate your assets to identify anything that can be sold.
Income and Expenses
The trustee will also examine your income and expenses to verify that you qualify for the type of bankruptcy you’re filing. For instance, in Chapter 7 cases, the trustee will review your income. They make sure it falls below the state median, making you eligible for Chapter 7 under the means test. In Chapter 13 cases, the trustee will evaluate your income and expenses to determine if your proposed repayment plan is feasible and fair to creditors.
Potential Fraud or Preferential Transfers
Another critical area of investigation is the potential for fraud or preferential transfers. The trustee will look for any recent transfers of property or large payments made to certain creditors and ensure fairness to all involved. If the trustee finds evidence of fraud or preferential treatment, they have the authority to reverse these transactions or take other legal action.
Debtor’s Compliance
Finally, the trustee investigates your compliance with bankruptcy requirements, such as attending the 341 meeting (the meeting of creditors) and completing required credit counseling courses. Failure to comply with these requirements can jeopardize your case and lead to dismissal.
Consult a Bankruptcy Attorney
The bankruptcy trustee’s investigation is a critical part of the bankruptcy process. It ensures that the creditors and the court conduct the process fairly and treat your case according to the law. Given the complexity of these investigations and the potential consequences of any issues that arise, it’s essential to work with a qualified bankruptcy attorney.
An attorney can guide you through the process. They help you prepare your bankruptcy petition accurately. They’ll also represent your interests during the trustee’s investigation. If you’re considering bankruptcy, contact an experienced bankruptcy attorney. They’ll handle your case with the care and expertise it deserves.
To learn more about bankruptcy and the the role of the trustee, contact R. Flay Cabiness, II, P.C. at (912) 417-5041 (Brunswick, GA); (912) 809-2141 (Hazlehurst, GA) or; (912) 324-3176 (Jesup, GA) to schedule a consultation.
