Bankruptcy Trustee

Bankruptcy trustee summary:

  • Bankruptcy trustees’ duties depend on the type of bankruptcy cases they are working on. 

  • For a Chapter 7 bankruptcy, a bankruptcy trustee sells the items the court says the filer can’t keep, and then distributes the proceeds to creditors. 

  • For a Chapter 13 bankruptcy, a bankruptcy trustee collects the filer’s monthly payments to distribute the money to creditors. 

Bankruptcy trustee definition and meaning

A bankruptcy trustee is a court-appointed person who manages bankruptcy cases. Bankruptcy trustees have specific duties they're required to carry out for different kinds of bankruptcies.

In a Chapter 7 bankruptcy, the trustee is responsible for selling the items that the court says the debtor (the person filing bankruptcy) can’t keep. Then they distribute the money to the creditors in the case. In a Chapter 13 bankruptcy, the trustee collects the debtor’s monthly payments and distributes the money to the creditors in the case.

A bankruptcy trustee is the administrator for bankruptcy cases. The bankruptcy court appoints trustees, and those trustees can make recommendations about how a debtor's estate should be handled. Final approval for any decision-making related to a bankruptcy case rests with the bankruptcy judge. 

Duties of the bankruptcy trustee

Bankruptcy trustees oversee bankruptcy cases. What they do depends on the type of bankruptcy. For personal bankruptcy cases, that means Chapter 7 or Chapter 13

  • In a Chapter 7 bankruptcy, you might be required to give up some of the things that you own (assets). For example, if you have multiple cars, you might have to give up all but one. Things you’re allowed to keep are called bankruptcy exemptions. Everything else is a non-exempt asset. The trustee's primary role is to sell those and distribute the money to your creditors. 

  • In a Chapter 13 case, you don’t have to give up any of your assets. Instead, you’ll make a monthly payment for three or five years. It's the bankruptcy trustee's job to collect those payments and distribute the money to your creditors

The trustee can also make recommendations to the court about a debtor's bankruptcy case. 

For example, say you file Chapter 13 and commit to a three-year repayment plan but stop making payments after 18 months. Your bankruptcy trustee could recommend that your case be dismissed. It would ultimately be up to the bankruptcy judge to decide whether to follow through. 

Bankruptcy trustees are fiduciaries. That means they're required to act in your best interests at all times. If you believe a bankruptcy trustee has acted unethically or that a conflict of interest exists, you can ask the court to have a new trustee appointed to your case. 

Bankruptcy trustee and the meeting of creditors

The bankruptcy process has certain required steps, and one of them is the Section 341 meeting, or the meeting of creditors. You have to attend this meeting, and failure to appear could be grounds for your case to be dismissed with no debt forgiveness. 

It's the trustee's job to oversee this meeting for Chapter 7 and Chapter 13 filers. During the meeting, the trustee can:

  • Review your bankruptcy petition to verify information about your debts, income, and expenses

  • Ask you questions about your financial situation and any relevant matters that might affect the discharge of your case

  • Test your understanding of the bankruptcy process

Creditors can attend this meeting but aren't required to. If creditors attend, they can also ask you questions. The trustee may ask for a continuance of the meeting if they feel additional information is needed for your case. 

DEBT RESOLUTION

Leave debt behind, so you can move forward

Get rid of your debt in 24-48 months and reduce what you owe with help from debt experts.

Bankruptcy Trustee FAQs

The 2-4-6-8 rule in bankruptcy outlines how often you can file. You can file a new Chapter 13 case two years after a previous Chapter 13 filing or four years after a previous Chapter 7 filing. You need to wait six years to file Chapter 7 after filing Chapter 13, and eight years between Chapter 7 cases. 

This rule exists to prevent people from abusing the bankruptcy system. It doesn't dictate how much debt you need to have to file bankruptcy, only how often you can file. 



There are several ways to get rid of debt without filing for bankruptcy. For example, you could use a debt consolidation loan to combine debts and streamline payments. You might work with a credit counselor to pay off your debts in full without a consolidation loan through a debt management plan (DMP). It's also possible to negotiate with your creditors to accept less than you owe. A debt consultant can help you weigh all the options to find the right one for your needs and situation. 



Consolidating debt isn't the same as bankruptcy. When you consolidate debts, you use a loan to pay off your other debts. After that, you repay the new loan according to the lender's repayment terms. Consolidation doesn't reduce the total amount you have to repay or eliminate your responsibility for your debts. 

With bankruptcy, you ask a court to erase your debts or give you time to repay them under an approved plan. Chapter 7 bankruptcy can eliminate different types of debt but in exchange, you may have to give up some of your assets. Chapter 13 bankruptcy allows you to pay off your debts over three or five years and keep your assets. 



Related Articles

what-is-bankruptcy.jpg

Bankruptcy might seem complicated, but under the right circumstances, it could be a straightforward way to get certain debts forgiven.

chapter-7-bankruptcy.jpg

Chapter 7 can be a powerful solution for serious debt problems. It might be right for you—or not. Find out here.

chapter-13-bankruptcy.jpg

We explain the advantages and pitfalls of Chapter 13 bankruptcy and how to tell if it’s right for you. Avoid costly mistakes by understanding your options.

Personal loans are available through our affiliate Achieve Personal Loans (NMLS ID #227977), originated by Cross River Bank, a New Jersey State Chartered Commercial Bank, Equal Housing Lender. Loan applications are subject to credit review, underwriting criteria, and approval. Loans are not available in all states and available loan terms/fees may vary by state. Loan amounts range from $5,000 to $50,000. For loans $35,000+ must have a minimum 660 credit score. APRs range from 8.99% to 29.99% and include applicable origination fees that vary from 1.99% to 8.99%. Repayment periods range from 24 to 60 months. Example loan: four-year $20,000 loan with an origination fee of 8.99%, a rate of 15.49%, and corresponding APR of 20.77%, would have an estimated monthly payment of $561.60 and a total cost of $26,966.26. To qualify for a 8.99% APR loan, a borrower will need excellent credit, a loan amount less than $12,000.00, and a term of 24 months. Adding a co-borrower with sufficient income; using at least eighty-five percent (85%) of the loan proceeds to pay off qualifying existing debt directly; or showing proof of sufficient retirement savings, could help you also qualify for lower rates. Loan Consultants for Achieve Personal Loans are available Monday-Friday 6 AM to 8 PM AZ time, and Saturday-Sunday 7 AM to 5 PM AZ time.

Home Equity loans are available through our affiliate Achieve Loans (NMLS ID #1810501). Equal Housing Opportunity. Offers may vary and all loan requests are subject to eligibility requirements, application review, loan amount, loan term, income verification, and lender approval. Product terms are subject to change at any time. Offers are a line of credit. Loans are not available to residents of all states and available loan terms/fees may vary by state where offered. Line amounts are between $15,000 and $300,000 and are assigned based on product type, debt-to-income ratio and combined loan-to-value ratio. 10, 15, 20, and 30-year terms available. Minimum 600 credit score applies for debt consolidation requests (20 and 30 year terms require a minimum credit score of 640), minimum 700 applies for cash out requests. Other terms, conditions and restrictions apply. Fixed rate APRs range from 6.74% - 14.75% and are assigned based on underwriting requirements and offer APRs assume automatic payment enrollment which may provide a discount (autopay enrollment is not a condition of loan approval). All terms have a 5-year draw period with the remaining term being a no draw period. Payments are fully amortized during each period and determined on the outstanding principal balance each month. Closing fees range from $750 to $6,685, depending on line amount and state law requirements and typically include origination (3.5% of line amount) and underwriting ($725) fees if allowed by law. Property must be owner-occupied. Combined loan-to-value ratio may not exceed 80% (20 and 30 year debt consolidation requests may not exceed 75%), including the new loan request. Property insurance is required and flood insurance may be required if the subject property is located in a flood zone. You must pledge your home as collateral. Loan funding time is dependent on full application and documentation submission, average funding time is 11 business days for 2025, including rescission. Monthly/yearly savings claim is based on average monthly debt savings from originated loans for Q4 2024. Monthly/yearly savings varies based on each loan situation and can be more or less than $800/$10,000. Requirements to obtain 6.74% APR include: debt to income ratio <=15%; cumulative loan to value <= 50%, including new request; loan amount between $15,000 and $150,000; term of 10 years; FICO of 800+; and automatic payment enrollment. Contact Achieve Loans for further details

Affiliated Business Arrangement Disclosure: Achieve.com (NMLS #138464) and Achieve Loans are both wholly owned subsidiaries of Achieve Company. Because of this relationship, your referral to Achieve Loans may provide Achieve.com a financial or other benefit. Where permitted by applicable state law, Achieve Loans charges: 1) an origination fee of 3.50%, and 2) an underwriting fee of $725. You are NOT required to use Achieve Loans for a home equity line of credit. Please click here for the full Affiliated Business Arrangement disclosure form. Please click here for the full Affiliated Business Arrangement disclosure form.

Resolution is available through our affiliate Achieve Resolution (NMLS ID # 1248929). All estimates for Achieve Resolution’s services are based on prior results, which will vary depending on your specific enrolled creditors and your individual program terms. Not all Achieve Resolution clients are able to complete their program for various reasons, including their ability to save sufficient funds. Achieve Resolution does not guarantee that your debts will be resolved for a specific amount or percentage or within a specific period of time. Achieve Resolution does not assume your debts, make monthly payments to creditors or provide tax, bankruptcy, accounting or legal advice or credit repair services. Achieve Resolution’s services are not available in all states, including New Jersey, and their fees may vary from state to state. Please contact a tax professional to discuss potential tax consequences of less than full balance debt resolution. Read and understand all program materials prior to enrollment. The use of Achieve Resolution services will likely adversely affect your creditworthiness, may result in you being subject to collections or being sued by creditors or collectors and may increase the outstanding balances of your enrolled accounts due to the accrual of fees and interest. However, negotiated settlements Achieve Resolution obtained on your behalf resolve the entire account, including all accrued fees and interest. C.P.D. Reg. No. T.S.12-03825.

© 2025 Achieve.com. All rights reserved. NMLS #138464