The Chapter 7 Bankruptcy Trustee

The Duties Of The Chapter 7 Bankruptcy Trustee

Your case is assigned to a bankruptcy trustee (“Trustee”) when you file  a chapter 7 bankruptcy.  Trustees are not judges and are not employed by the government.  The Trustee also, legally, does not have to be a lawyer.  However, in Las Vegas, they are all lawyers.  The Trustee’s primary duty is to administer the debtor’s estate for the benefit of the creditors and make sure that all of the bankruptcy laws are followed.  Also, a Trustee’s job is to make sure that all of the bankruptcy documents (schedules) contain truthful information.   One crucial point to remember is that Trustees are not to be feared.  However, a Trustee is not your friend as one of the Trustee’s primary responsibilities is to liquidate your assets and then reimburse the creditors with any proceeds that the trustee may receive from the liquidation of your personal items.

Debtor’s Estate

Knowing what a debtor’s estate entails is essential if you want to understand a Trustee’s role in bankruptcy.  A debtor’s estate is formed one a Chapter 7 bankruptcy is filed .  The debtor’s estate is legally separate from the debtor and is composed of the property that you own at the time you file bankruptcy.

A Chapter 7 Trustee’s Duties

  1. Liquidation– A Trustee identifies all of the debtor’s non-exempt property in the debtor’s estate, liquidates said property, and then distributes the proceeds of the liquidation to the debtor’s creditors.  It should be mentioned that Trustees only receives $60 out of every $335 bankruptcy filing fee.  So, taking into account the complexity of some cases a Trustee could lose money from some bankruptcy filings.  However, since the Trustee only received $60 per case, they do have an incentive to quickly process your bankruptcy case; so, you can receive your discharge ASAP.  Trustees receive 10% of whatever they can liquidate from the property in a debtor’s estate.   As a result,  Trustees have an incentive to make sure that all non-exempt property is liquidated or that a debtor makes arrangements (by paying the trustee) to keep any nonexempt property
  2. Challenge Creditor’s Claim-This doesn’t happen very often in Chapter 7 cases.  But, Trustees are required to make sure all claims to a debtor’s estate are legal.
  3. Challenge the Discharge– The trustee has a duty to challenge debtors bankruptcy discharge if they feel that something is wrong.  A few examples of when a bankruptcy discharge may be challenged is if a debtor commits perjury during the 341 hearing, a debtor does not provide all requested documents,  and a debtors schedules are not truthful. (I.E., A debtor fails to include rental property on the bankruptcy schedules.)
  4. Investigate-Trustee’s need to examine all documents given to them by the debtor.  For example, the Trustee examines bank statements to look for any unusual or large deposits.
  5. Administer The Bankruptcy– The Trustee needs to ensure that all bankruptcy rules and procedures are faithfully followed.


The vast majority of debtors only see the Trustee once at the 341 hearing,  Also, most 341 meetings last a little over two minutes.  The Trustees are just doing a job and as long as you are honest, take your credit counseling courses,  and provide all required documents your case will proceed quickly.

Click Here-if you need a refresher on the Chapter 7 bankruptcy. If you’re interested in the chapter 13 bankruptcy, GO HERE