Chapter 13 Trustee's Duties in U.S. Bankruptcy Courts
Following the meeting of the creditors in Chapter 13 cases, trustees file reports with U.S. bankruptcy courts that either recommend or oppose proposed plans. By working with the trustees, most debtors reach a point of agreement with trustees for plans that conform to guidelines established by U.S. bankruptcy courts. The role of trustees is twofold: to review cases for compliance with applicable law and point out terms that may be unacceptable to U.S. bankruptcy courts.
The conformation of debtors' plans by U.S. bankruptcy courts is essential for Chapter 13 cases. After confirmation, trustees retains authority as administrators over plans under supervision of U.S. bankruptcy courts. Trustees collect payments, disburse funds and file accountings with the U.S. bankruptcy courts. Trustees are paid administration fees which are deducted from payments before disbursement to creditors. Home loans frequently are paid "outside of the plan" which allows debtors to pay mortgage companies directly rather than allow trustees to deduct a percentage fee. While plans continue, parties in interest may request modification to either increase or decrease payments. Trustees may request modification of payment amounts based upon their own motions filed U.S. bankruptcy courts.
U.S. bankruptcy courts - trustee's mission statement
The United States Trustee Program is administered by the Department of Justice. The DOJ provides local trustees who administer Chapter 13 plans. The mission of the trustee programs, provided by the DOJ is summarized as follows:
The United States Trustee Program acts in the public interest to promote the efficiency of U.S. bankruptcy courts and promote the integrity of the U.S. bankruptcy courts system. It works to secure the just, speedy, and economical resolution of cases pending before U.S. bankruptcy courts; monitors the conduct of parties and takes action to ensure compliance with applicable laws and procedures used by U.S. bankruptcy courts; identifies and investigates bankruptcy fraud and abuse; and oversees administrative functions in cases filed with U.S. bankruptcy courts.
While cases are pending in U.S. bankruptcy courts
The duties of a trustee are addressed in 11 U.S.C. 341.The section provides, in part, trustees shall:
- appear and be heard at any hearing that concerns: (A) the value of property subject to a lien, (B) confirmation of a plan, or (C) modification of the plan after confirmation;
- advise, other than on legal matters, and assist the debtor in performance under the plan; and
- ensure that the debtor commences making timely payments under section 1326.
Only two states do not assign trustees. In these two states, the local U.S. bankruptcy courts assign administrators to perform the duties of a trustee.
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