bankruptcy California



Below you will find a break down of the role and duties of the trustee during the bankruptcy process, depending on the bankruptcy type.

We hope this may answer any question you have.

if not please contact our office for further consultation.

What Does a Bankruptcy Trustee Do?

A bankruptcy trustee plays a crucial role in the bankruptcy process and is remunerated for their services. Along with receiving a fee for overseeing the bankruptcy proceedings, they may also be reimbursed for reasonable expenses incurred during the process.

The compensation amount depends on the specific type of bankruptcy being dealt with.

In Chapter 7 or 11 bankruptcy cases, the trustee is entitled to receive a commission based on a percentage of the funds distributed to secured claimants and other parties involved.

It’s worth noting, North Carolina and Alabama have adopted bankruptcy administrators to carry out similar functions as U.S. trustees do in the remaining 48 states.

Understanding the Roles of Bankruptcy Trustees in Different Bankruptcy Types

Chapter 7 – Liquidation

Chapter 7 liquidation bankruptcy is available to individuals or businesses. Its purpose is to discharge certain debts in order to give the debtor a “fresh start.”



In Chapter 7, the trustee takes over the business property and sells it or turns it into cash to pay creditors. The debtor may be able to keep some personal items and possibly real estate, called “exempt property.”


Chapter 7 trustees are often referred to as “panel trustees,” because they are appointed by the U.S. trustee to a panel and then assigned to the specific bankruptcy


Click here For More information about chapter 7


Chapter 11 Reorganization

Chapter 11 is called “reorganization” bankruptcy because it sets up a process for the individual or business to reorganize its debts while continuing to operate. Chapter 11 is used mostly for business bankruptcies

In most cases, no trustee is appointed for a Chapter 11 bankruptcy. The debtor (called a “debtor in possession”) operates the business and performs trustee functions. If the court appoints a trustee, the latter takes control of the debtor’s business and property during the reorganization period. A trustee can appoint a creditor’s committee to consult with the debtor to participate in forming a plan.





Chapter 11 for Small Businesses

Chapter 11 Sub-chapter V bankruptcy is a shorter, streamlined small business bankruptcy process. These cases involve more oversight by the trustee, including an initial interview and monitoring of the activities of the small business debtor. The trustee works with the small business debtor and its creditors to create a reorganization plan they all agree to.


Chapter 13 Repayment Plan

Chapter 13 bankruptcy allows individuals with regular income to keep their property and pay debts based on a repayment plan over three to five years. The court approves the plan and budget, and the trustee acts as a disbursing agent, accepting payments from the debtor and distributing them to creditors based on the repayment plan.


The Chapter 13 bankruptcy process includes a meeting of creditors and the debtor, set up and run by the trustee. Before the meeting, the trustee can consult with the trustee to make sure that the petition and repayment plan are complete and accurate.


Chapter 13 trustees are called “standing trustees” because they have a standing (continuing) appointment to cases within a specific geographic area.


In some cases, a Chapter 13 trustee may advise the debtor to take a course in financial management.


Click here For More information about chapter 13

Bankruptcy Trustee: Roles and Functions

Understanding the responsibilities of a bankruptcy trustee is crucial to grasp the standard bankruptcy process, especially in the context of Chapter 7. In a typical scenario, the debtor initiates the process by filing a petition with the bankruptcy court, providing essential information about assets, liabilities, income, expenditures, contracts, and leases.

Following this, the court appoints a trustee who assumes control of the case and undertakes the following key tasks:

  1. Asset Liquidation: The trustee is responsible for collecting and converting the business’s assets into monetary value.
  2. Financial Investigation: The trustee thoroughly examines the debtor’s financial affairs to gain comprehensive insights.
  3. Creditor Claims Review: Validity of claims from creditors, those to whom the debtor owes money, are carefully assessed.
  4. Fair Distribution: The trustee distributes the available funds to creditors following a specific order of priority.
  5. Debt Discharge: In some cases, the trustee approves or contests the discharge of certain debts, which allows the debtor to be exempted from repaying them.
  6. Reporting Obligations: The trustee prepares and submits periodic and final reports to relevant government agencies, including tax-related reports.

Furthermore, bankruptcy trustees have the authority to initiate Adversary Proceedings (AP), which are separate lawsuits linked to a bankruptcy case. These proceedings address various matters, such as recovering money or property, validating liens or property interests, determining dischargeability of debts, removing creditor claims, and other related actions.

It’s essential to understand that bankruptcy trustees do not represent the debtor; instead, they operate on behalf of the bankruptcy court. While it is possible to represent oneself at the bankruptcy court, considering the complexity of some cases, it might be beneficial to engage a bankruptcy attorney for representation.

A bankruptcy trustee should be seen as a guiding force throughout the process. Cooperation with the trustee by providing all necessary information, active participation in creditor meetings, and prompt responses to requests can contribute to a smoother and more expeditious case resolution.


D Masin Consulting

D Masin Consulting LLC

Monrovia, CA 91016

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bankruptcy California

bankruptcy California