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There are two primary types of bankruptcy trustees – chapter 7 and chapter 13.
Chapter 7 Trustee
The most common type of trustee is a Chapter 7 Trustee – assigned to collect and liquidate assets from an individual and then repay these assets to creditors. The trustee will also consider and evaluate exemptions that are applied for by the petitioner. The Chapter 7 Trustee will preside over the "meeting of creditors", which is also called a 341 meeting because of the bankruptcy code that requires such a meeting. This meeting is held about thirty days after the bankruptcy filing where the debtor (you) answer questions under oath about your assets and liabilities. Creditors may attend this meeting, but usually they do not show up.
A Chapter 7 Bankruptcy is usually the preferred method of bankruptcy for most debtors as they can most easily discharge debt and being life anew once again. However, qualifying for this type of bankruptcy has gotten more difficult in recent years.
Chapter 13 Trustee
If you have so much debt that you believe it is highly unlikely you can repay what you owe, but you also have regular income a Chapter 13 Bankruptcy filing is likely the most appropriate approach for you.
Debtors make repayments (usually far less than you owe) to the Chapter 13 Bankruptcy Trustee, who in turn repays creditors. This form of bankruptcy can typically last 3 – 5 years. One major advantage of a Chapter 13 Bankruptcy is that it allows you to save your home from foreclosure. You also may be able to catch up on a delinquent mortgage as well.
Chapter 11 Trustee
This type of bankruptcy trustee oversees the filing of bankruptcy by businesses, including a corporation, sole proprietorship or partnership.
A corporation does not risk their personal assets in this type of filing, other than the stock they may own in a company. This is not true for a sole proprietorship, however. Partnerships are even more clouded as sometimes the personal assets are included and sometimes they are not.
If you are filing bankruptcy, we encourage you to meet with a bankruptcy attorney and bankruptcy lawyer to ensure you are following all bankruptcy laws and meeting all the guidelines to ensure your case is successfully file.