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Michael D. Hart, P.C.
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What trustees do in a bankruptcy

The role of a trustee in bankruptcy varies depending on whether the person has filed for a Chapter 7 or a Chapter 13 bankruptcy. In either case, when a Virginia consumer decides to file for bankruptcy, it is necessary to complete a document that lists assets, debts, property and expenses. A trustee may ask for additional information such as pay stubs.

In a Chapter 7 bankruptcy, the trustee reviews the assets to see which are exempt and which are nonexempt and thus subject to liquidation. People are allowed to keep some property in a Chapter 7 bankruptcy, and in some cases, all the property owned by a person might be exempt. This is known as a "no asset case".

A person who files for a Chapter 13 bankruptcy may be able to keep more assets and work out a payment plan. The trustee has to approve the plan, and payments are made to the trustee. Within 30 days of filing for bankruptcy, the person must begin making payments which are held by the trustee until the court approves the plan. The trustee also has the job of distributing the payments.

People who are struggling to manage their debt might want to talk to an attorney about the situation. The attorney may be able to suggest options for debt relief and explain the limits of bankruptcy. For example, some debts, such as student loans, taxes and alimony, generally cannot be discharged in a bankruptcy. However, any type of bankruptcy stops creditor actions ranging from harassment to lawsuits at least temporarily. Filing for bankruptcy also stops the foreclosure process, and with a Chapter 13 bankruptcy, a person might be able to keep a home. Furthermore, while a bankruptcy does stay on a credit report for several years, it is still possible to begin rebuilding credit afterward with secured cards and by paying bills on time.

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Michael D. Hart, P.C.
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Roanoke, VA 24011

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