Understanding the Services of a Chapter 13 Trustee

Among the different types of bankruptcies is a Chapter 13, which is often referred to as a “wage earner’s plan. With this bankruptcy, an individual with regular income is allowed by the court to devise a repayment plan that lasts for a three- to five-year period for some, if not all, of the debt owed. Because of the legalities involved, this person should work with a qualified Utica bankruptcy attorney.

If you are facing Chapter 13 bankruptcy, the court will appoint a trustee. During the three to five years, payments are made to creditors based on an approved financial plan. The trustee serves in multiple roles, such as overseeing and determining if the bankruptcy is even feasible. Ultimately, the trustee has a responsibility to both you as the debtor and to the creditors, making sure the devised plan is fair for both sides. If one party is unfair to another or either party commits fraud, the trustee would take control by stopping the bankruptcy.

Prior to filing, you and the trustee will meet to confirm that no fraud is being committed. To accomplish this, all of the financial information provided by you is carefully reviewed. In other words, the trustee does investigative work to ensure the Chapter 13 bankruptcy makes sense. Obviously, no one benefits if you have financial obligations that can never be met. While looking out for your best interest, the trustee also makes sure that creditors are treated fairly.

In working with a Utica bankruptcy lawyer, you will be advised that mediating disputes between you and the creditors is another responsibility of the trustee. Having the authority to speak directly to you and the creditors allows the trustee to make suggestions for compromise. If an agreement is reached, the court has fewer issues to resolve, saving you and the creditors time, effort, and money.

According to the agreed-upon financial plan, you pay the trustee, who pays the creditors. As part of this, the trustee makes sure that you are paying and that your creditors are getting their fair share. The trustee also helps educate and advise you. For example, unless you have permission from the bankruptcy court or the trustee, incurring new debt, selling off assets, and refinancing loans are prohibited while in Chapter 13 bankruptcy.

However, throughout the three- to five-year repayment period, unexpected expenses may arise. For instance, your car may break down, putting you in a position of needing to purchase a new vehicle, or you may be faced with home repairs or a financial emergency. For these situations, the trustee will review the situation and then guide you to the right decision that will not disrupt the bankruptcy procedure.

To help you achieve success with a Chapter 13 bankruptcy filing, the trustee plays a critical role in the overall process. Keep in mind that if you have questions or want legal counsel, you can always work with a reputable Utica bankruptcy law office. In addition, a bankruptcy attorney can help you determine if credit counseling or debt consolidation are options worth consideration.

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