Prior to 1978, the United States Bankruptcy Court, part of the judicial branch of the government, appointed and supervised bankruptcy trustees. As a result, debtors, creditors, and other parties in interest dealt with bankruptcy trustees under the specter that any bankruptcy court involvement would contain a potential conflict of interest between the court and the trustee. Concern was prevalent that the court might not impartially adjudicate their rights as adversaries to this court-appointed and supervised trustee.
The Bankruptcy Reform Act sought to address this issue, and judicial and administrative functions within the bankruptcy system were bifurcated. The administrative functions were placed within the Department of Justice through the creation of the United States Trustee Program (“USTP”).
The USTP promotes the efficiency of the bankruptcy system while protecting and preserving its integrity. It attempts to obtain the just, speedy, and economical resolution of bankruptcy cases while monitoring the conduct of parties and acting affirmatively to ensure compliance with applicable laws and procedures. It identifies and investigates bankruptcy fraud and abuse while performing oversight and administrative functions in bankruptcy cases.
The trustee’s duties include reviewing the debtor’s schedules, statements, chapter 13 plan, tax returns, and other relevant information, evaluating the debtor’s proposed plan for compliance with federal bankruptcy law, and other administrative functions necessary to carry out the terms of the Chapter 13 plan.
Chapter 13 debtors propose a plan of reorganization to pay creditors over three to five years. They make payments to the Chapter 13 trustee, who distributes this money to any creditors who have filed valid claims allowed by the court. The Chapter 13 case trustee is also responsible for determining which creditors’ claims are legitimate, and that, in turn, the debtor has proposed a viable plan that allocates all disposable income to pay the claims of creditors. Finally, the Chapter 13 trustee helps to administer and distribute the funds from a debtor’s Chapter 13 plan payments.
Talk to the Morrison Law Group about your Chapter 7 or Chapter 13 bankruptcy options. Call 801.456.9933 today to schedule a FREE consultation. We are Utah’s only statewide bankruptcy law firm and have locations in Ogden, Logan, Sandy, and St. George to serve the residents of the counties of Weber, Cache, Salt Lake, Utah, Morgan, Davis, Washington, and surrounding areas.