Legal Powers & Duties of a Bankruptcy Trustee in Chapter 7

To ensure smooth operation and legal compliance with the bankruptcy process, each Chapter 7 case is assigned a bankruptcy trustee by the United States Trustee. A bankruptcy trustee overlooks the entire case right from its inception to the final hearing and has many responsibilities and powers as defined by the U.S. Code: Title 11-Bankruptcy. The work of trustee starts with the verification of all the documents submitted with the bankruptcy petition so as to ascertain whether the case is eligible for relief under Chapter 7 or not. It is worthwhile to mention here that apart from appointing trustee, the United States Trustee, also determines taking into account supporting facts submitted by the debtor that whether providing relief to the debtor is a substantial abuse of the bankruptcy laws or not.

Some of the relevant documents apart from the financial ones include credit counselling certificate (or waiver certificate) and the Means Test Calculation Form 22A (with the Statement of Current Monthly Income). Both of these documents are imperative to be filed if relief under Chapter 7 is requested (though, there are some exceptions to credit counselling certificate). Not only these documents are used to determine eligibility but also help in proving substantial abuse of the bankruptcy laws, if any.

An important meeting, presided by the bankruptcy trustee, takes place approximately 30 days from the filing of the petition that is referred as the 341(a) meeting of creditors. The primary purpose of this meeting is to clear any doubts of creditors or trustee regarding the bankruptcy filed by the debtor and raise objections if there are discrepancies in the documents submitted by the debtor. Though it's known as meeting of creditors, generally creditors do not attend this meeting until and unless they are secured creditors or are skeptic whether bankruptcy is filed in good faith.

Some of the important questions asked by the trustee (and creditors) during the 341(a) meeting of creditors are related to debtor's monthly income, assets (especially non-exempt assets), equity in the property (to gauge how much could be paid to the unsecured creditors), prior bankruptcy filing (if any), exemptions (Federal & State), etc. Trustee in this 341(a) meeting of creditors has to make sure that different laid down procedures such as related to debtor's identification (without which meeting cannot proceed), use of interpreters (if needed), questioning format & procedures, administration of oath, procedure to be followed in the absence of debtor or his/her attorney, recording of meeting, etc. are followed as intended.

One of the most important duties & powers of the bankruptcy trustee is to sell & distribute the non-exempt property of the debtor to the creditors. The manner in which the valuation of the property and consequent distribution is done depends on the corresponding sections given in the Bankruptcy Code.

A bankruptcy trustee has several roles and responsibilities that are performed at every step of the process till the time bankruptcy is finalised and distribution of assets (if any) is completed. For more information Visit

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