History

• Bankruptcy trustees are overseen by the U.S. Trustee Program. The government created the U.S. Trustee Program in 1978 as part of the Bankruptcy Reform Act. United States Trustees appoint and supervise private trustees who are assigned to judicial districts in their respective states. United States Trustees also monitor bankruptcy cases for fraud and abuse while making sure they comply with the U.S. Bankruptcy Code.
  
  

Chapter 7

• Bankruptcy trustees in Chapter 7 cases are not government employees, according to the National Association of Bankruptcy Trustees. Chapter 7 bankruptcy trustees are private citizens, usually attorneys or accountants, appointed by the U.S. Trustee Program to administer bankruptcy cases. In a Chapter 7 bankruptcy case, the debtor's assets, if any, are liquidated and the proceeds from the sale of the assets are distributed among the debtor's creditors. The remaining eligible debt is discharged and the debtor does not have to repay it. The bankruptcy trustee's primary role in a Chapter 7 case is to liquidate those assets for the greatest benefit to creditors.
  
  

Chapter 13

• A Chapter 13 bankruptcy, also called a wage-earner's plan, requires a debtor to repay at least a portion of their debts, unlike a Chapter 7 case. According to the National Association of Chapter 13 Trustees, the debtor gives a predetermined portion of their earnings, usually all of their disposable income, to the bankruptcy trustee, who distributes the money to the debtor's creditors and makes sure the debtor complies with the terms of the plan. The debtor receives a discharge of eligible debts once they complete the payment plan. Bankruptcy trustees have a much higher degree of involvement in Chapter 13 cases than in Chapter 7 cases.
  
  

Function

• Filing for bankruptcy creates an "estate" for the debtor, and the primary role of bankruptcy trustees is to act as the administrator of that estate. In all bankruptcy cases, the bankruptcy trustee represents the interests of the creditors and is there to make sure debtors comply with the U.S. Bankruptcy Code by completing all required documents and filings in a timely manner. Bankruptcy trustees act with impartiality in all cases, oversee all creditor meetings and question the debtor under oath.
  
  

Time Frame

• The U.S. Trustee Program appoints Chapter 7 bankruptcy trustees to a panel in a specific judicial district for a period of one year. The U.S. Trustee Program appoints "standing trustees" to administer Chapter 13 cases in a specific geographic area.