When you file for Chapter 13 bankruptcy, you will need to hire a lawyer, but your lawyer is not the person that will be handling most of the case. A bankruptcy trustee will actually handle most of the duties of your bankruptcy, and a trustee is someone that is appointed to you by the bankruptcy court. Your trustee plays a huge role in your case and here are three important things the trustee will do.
Determine If The Plan Is Acceptable
One of the main roles of your bankruptcy attorney is to help you file the paperwork for the bankruptcy. Before this is done, your chapter 13 bankruptcy attorney will carefully review and analyze your financial situation, including your income and debts. Your attorney will:
- Help you decide whether to file for Chapter 13 or Chapter 7
- Decide if you qualify for bankruptcy
- File your paperwork for you
When the trustee receives the paperwork, his or her main goal is to make sure that it meets all the legal requirements of bankruptcy. If it complies with the legal requirements, the trustee will set up a meeting of the creditors.
You will need to attend this meeting, along with your bankruptcy attorney, and any creditors that would like to come are invited. This meeting is basically designed to allow creditors to object to the bankruptcy if they have a good and legal reason to do so.
Accept Payments and Pay Debts
While your bankruptcy attorney has the job of creating a repayment plan based on your debts and income, it is the job of the trustee to orchestrate and carry out this plan. When you file for Chapter 13, you must make payments (either weekly, bi-weekly, or monthly) to the trustee. This payment plan will last for three to five years, and during this time you will not have any contact with your creditors.
When the trustee receives your payments, he or she will distribute them accordingly to your creditors. The amount you must pay for each payment is determined at the beginning the bankruptcy case, and the payments you must make to creditors are also calculated at the start. You will know exactly how much you must pay in all, as long as nothing changes with your finances.
Monitor Changes In Your Finances
The third key role your bankruptcy trustee will play is monitoring your financial situation. The trustee will need to know about any changes that occur, including changes in:
- Family size
Each of these changes could ultimately have an impact on your bankruptcy case, and each could cause your normal payments to go up or down. You must report all changes to the trustee as soon as they happen, and this is something you will have to do during the entire case. You may also be required to fill out monthly expense and income statements and turn them in to the trustee.
The purpose of this is to find out if your plan is still legally acceptable, or if it needs to be modified due to the changes in your life.
Your trustee will also be responsible for checking your federal and state tax returns each year. This is done to ensure that you are supplying him or her with accurate information, and it may also be completed as a way of intercepting tax refunds that you are owed.
According to All Law, the trustee assigned to you is paid out of the payments you make each week or month. The amount the trustee collects is usually between 7% to 10% of your payments, and this is generally disclosed at the start of the case.
You will be able to communicate with your bankruptcy lawyer and your trustee throughout your entire bankruptcy case. If you would like to learn more about Chapter 13 and how it works, contact a bankruptcy attorney in your area.