Bankruptcy

What Does a Bankruptcy Trustee Do?

By Cara O'Neill, Attorney
Learn about the trustee’s role in your bankruptcy case.

The bankruptcy trustee is the court-appointed official tasked with overseeing your case. The trustee’s primary responsibility is to find assets that can be used to pay your creditors the debt you owe. But that’s not all the trustee does.

The trustee (or staff) will review your petition for accuracy, verify your identity at the 341 meeting of creditors (the meeting that all bankruptcy filers must attend), investigate your case for hidden assets, and distribute funds to creditors. The trustee’s specific duties depend on whether you file for Chapter 7 or Chapter 13 bankruptcy.

While it’s tempting to believe that the trustee is there to help you, it’s not the case. The more property the trustee recovers for creditors, the more the trustee gets paid. The trustee receives a flat fee of $60 per Chapter 7 case (as of August 2016). Also, trustees are entitled to a percentage of the funds they disburse to your creditors. In other words, the more assets the trustee finds, the more that goes into the trustee’s coffers. The fee rules give trustees a financial incentive to look closely at bankruptcy filings, especially if you have valuable property. In essence, the trustee can earn a “commission” if they can actually grab some property, sell it, and divide the proceeds among the creditors.

(You can find out more about the role of the trustee by reading What Questions Will a Bankruptcy Creditor Ask at the 341 Meeting of Creditors?)

Go to the main bankruptcy FAQ page.

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