What Is The Difference Between a Chapter 7 and Chapter 13 Trustee?

On Monday I discussed some of the general duties of a bankruptcy trustee in both Chapter 7 and Chapter 13 cases. Trustees in these two types of cases, however, are going to be looking for different things and be involved for different lengths of time.

I will start with Chapter 7 bankruptcy, where the main objective of the trustee is to liquidate your non–exempt assets for the benefit of creditors. Your bankruptcy attorney can help you retain as much personal property as possible by using exemptions. The trustee is looking for non-exempt assets to liquidate to cash for your creditors, but he or she also receives a percentage of the funds he or she collects, which gives the trustee incentive to maximize the amount of assets recovered.

Whereas a Chapter 7 case can be resolved in a matter of months, a Chapter 13 case will take years and, consequently, the trustee is much more involved. While he or she is less likely to be taking your assets since you will be repaying, in a Chapter 13 filing, the trustee will review your proposed repayment plan and determine the amount you have to pay each month. Your plan may propose one thing, but the trustee may take you to court to force you to pay more. This will involve a review of your income and expenses. In these cases, the trustee’s compensation is a percentage based on the monthly payment schedule set up to pay your creditors.

As I said yesterday, the most important thing to remember about a bankruptcy trustee is that he or she does not provide you with legal advice and is not on your side. If you are concerned about retaining property, need help ensuring a payment you can afford or simply want to make sure you are doing everything correctly when filing, you will want to speak to a Washington DC or Maryland bankruptcy lawyer who can answer whatever questions you might have.

Law Firm of Kevin D. Judd – Maryland bankruptcy attorney

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