Daisy Rogozinsky
June 22, 2022

Chapter 7, 11, and 13 bankruptcy cases are appointed a bankruptcy trustee. In this article, we’ll define the term “trustee” and explain its role in bankruptcy. 

Key Takeaways

  • A trustee is an entity that holds and administers a party’s assets for the benefit of a third party 
  • Trustees may be appointed for bankruptcy, charity, trust funds, and more
  • A bankruptcy trustee oversees a debtor’s bankruptcy proceeding, representing the creditors’ interests
  • Bankruptcy trustees must be qualified in education, background, and character
  • Bankruptcy trustees’ exact duties vary depending on the type of bankruptcy, but they all review bankruptcy forms, verify financial information, make sure there is no fraud, and facilitate the meeting of creditors
  • Bankruptcy trustees are paid from the debtors’ assets if they have any

What Is a Trustee?

A trustee is an entity that holds and administers one party’s property or assets for the benefit of a third party. There are a variety of purposes for which a trustee may be appointed, including:

  • Bankruptcy
  • Charity
  • Trust funds
  • Certain types of retirement plans

Trustees are trusted to make decisions in the best interests of the trust’s beneficiary. They are often given fiduciary responsibility, meaning they manage the beneficiary's assets. 

Trustees in Bankruptcy 

A bankruptcy trustee is appointed by the bankruptcy court to oversee a debtor’s estate in a bankruptcy proceeding. They represent the creditors in the case. 

Bankruptcy trustees are used to serve as an impartial party that can take charge of the debtor’s assets so that creditors and courts don’t have to be responsible for collecting and distributing a bankruptcy debtor’s property.

The bankruptcy trustee must act in accordance with the Bankruptcy Code. The bankruptcy court must approve any actions recommended by the bankruptcy trustee.

Who Can Be a Bankruptcy Trustee?

Bankruptcy trustees are assigned by the United States Trustee Program, which is part of the Department of Justice. They often have backgrounds as certified public accountants and lawyers. Although exact qualifications vary depending on the type of bankruptcy, to be a bankruptcy trustee, a person must usually meet the following qualifications:

  • Residing in the judicial district in which the bankruptcy case is pending
  • Being competently licensed as a bankruptcy trustee
  • Being educationally well qualified, possessing a bachelor’s or postgraduate degree in a business-related field
  • Having substantial case administration experience
  • Passing a five-year background and fingerprint check
  • Having a proper tax return filing history
  • Not having a criminal history
  • Being of good moral character and integrity

Duties of Bankruptcy Trustees

The exact duties of the trustee vary depending on the type of bankruptcy

  • In Chapter 7 bankruptcy, the trustee manages the sale of nonexempt property and administers the distribution of proceeds to creditors
  • In Chapter 11 bankruptcy, the trustee reorganizes the debtor’s business obligations, debts, and assets so they can continue operation
  • In Chapter 13 bankruptcy, the trustee receives monthly payments from the debtor and distributes them to the creditors on a payment plan 

In any type of bankruptcy, the trustee’s duties include:

  • Reviewing bankruptcy forms
  • Investigating and verifying financial information
  • Making sure the bankruptcy claim is not fraudulent
  • Facilitating the 341 meeting of creditors

Payment of Bankruptcy Trustees

Trustees of Chapter 7 bankruptcy cases can earn a commission on the assets they sell. If there are no assets, the trustee will not earn in commission. In Chapter 13 cases, the trustee’s fee is typically built into the monthly payment plan.

Ask a Lawyer

Ask your own question and get advice from expert attorneys
Ask Question

Featured Bankruptcy Lawyers

Way Law Firm, PA

25 years in practice
Bankruptcy, Child Custody, Child Support, Criminal Defense, Divorce & Family Law
View Profile

Crumbley-Blackwell-Price Attorneys

25 years in practice
Adoption, Auto Accidents, Bankruptcy, Child Custody, Child Support
View Profile

Trigilio, Stephenson & Dattilo, PLL

22 years in practice
Auto Accidents, Bankruptcy, Personal Injury, Wrongful Death
View Profile

Richardson Law Firm P.C.

12 years in practice
Hair Relaxers Lawsuit, Mass Tort, Personal Injury, Rideshare Lawsuits, Tepezza Lawsuit
View Profile

Adam Rieth - Injury Attorney

10 years in practice
Auto Accidents, Brain Injury, Motorcycle Accidents, Personal Injury, Truck Accidents
View Profile

Vanguard Attorneys

12 years in practice
Auto Accidents, Motorcycle Accidents, Personal Injury, Truck Accidents, Wrongful Death
View Profile


Are you looking for an attorney? Do you have questions about a legal case you are facing? Contact us now and we will put you in touch with a lawyer for free.
Attorney At Law is changing how clients connect with lawyers. By providing an innovative platform to lawyers who want to expand their practice’s reach, AAL is bringing law practices into the future.
6142 Innovation Way
Carlsbad, California 92009
Some of the content of this website may be considered attorney advertising under the rules of certain jurisdictions. The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute an attorney-client relationship.
crossmenuchevron-upchevron-down linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram