Role of Jacksonville Florida Chapter 7 Trustee
Who is the Chapter 7 Trustee and what do they do?
The United States Department of Justice appoints bankruptcy trustees to identify, collect, and liquidate assets of a Chapter 7 debtor for the debtor’s unsecured creditors. In most cases, a debtor who is eligible under the means test1 has no assets and there is no money available to give to the debtor’s creditors. If there are assets which can be collected and sold to pay unsecured creditors, the job of doing so falls to the trustee.
If there are assets, the trustee collects those assets into an “estate” of the debtor’s and the debtor’s creditors will file proofs of claim outlining their claims against the bankruptcy estate. Thereafter, the trustee’s role is to get the maximum amount of money for the debtor’s unsecured creditors. Usually, the trustee will examine each of the non-exempt assets of the debtor to determine whether they have any value. The test generally is whether the collection and sale of the asset will need more money than is potentially owed on the property, if any. For example, if a debtor has a vehicle which is worth $5,000.00 and the debtor owns the car free and clear of any creditors, the trustee likely will collect the vehicle and sell it. However, if the vehicle is worth $5,000, but there is a $4,000 lien against the vehicle, the trustee may or may not elect to collect and sell the vehicle due to the expense and uncertainty of whether the vehicle will garner the estimated $5,000 value of the vehicle. Every case is different and we would be happy to discuss your Florida bankruptcy needs.
The Chapter 7 Trustee also asks debtors a series of questions at the creditor meeting, known as the 341 meeting. Click here for a discussion and list of questions.
In cases of business liquidations under Chapter 7, the Trustee may allow or even order a business to continue to operate in order to maximize the return for the unsecured creditors on their claims if the continued operation of the business may yield more assets.
The actual payment of the creditors is governed by Section 726 of the bankruptcy code. In short, there are six classes of claims and each class of claims must be paid before the next lower class of claims is entitled to any money. Neither the debtor nor the debtor’s attorney are involved in this process and sometimes the distributions occur well after the discharge has been granted.
Please see other pages that we have on Chapter 7 bankruptcies, including:
- What relief is offered by a Chapter 7?
- How does a Chapter 7 case proceed?
- What property is exempt from Chapter 7 liquidation?
- Who is the Chapter 7 Trustee and what do they do?
- How does a Chapter 7 discharge debts?
Please contact us to make an appointment to discuss your bankruptcy questions.
Complete our bankruptcy case evaluation form.
The means test is a dense subject. The official link to the Bankruptcy Trustee has been provided, but for a simpler explanation of the means test, please feel free to call to discuss.
