Prior to the enactment of the Bankruptcy Reform Act of 1978 (the “Act”), bankruptcy judges were responsible for the day-to-day administration of bankruptcy cases. As the number of bankruptcy cases was increasing, this burden was viewed as an inefficient use of judges’ valuable time and became one of the primary reasons that Congress passed the Act. Thereafter, the Department of Justice and the U.S. Trustee’s Office assumed the role of monitoring and supervising bankruptcy cases.
Chapter 7 trustees are appointed to chapter 7 cases on a fair and equitable basis by utilizing a blind rotation system that includes all chapter 7 cases, whether they are asset or no-asset cases.
A chapter 7 trustee is the estate representative for the recovery, preservation, liquidation, and distribution of chapter 7 bankruptcy estates. Once a bankruptcy case is filed, all a debtor’s non-exempt property, which is the property that the debtor is legally permitted to keep from the reach of creditors, goes into his or her bankruptcy estate.
The trustee also has fiduciary responsibilities to the bankruptcy case’s parties in interest, such as creditors. The goal of the U.S. Trustee is to establish a system that permits the complete, economical, equitable, and expeditious administration of chapter 7 cases, while allowing the trustee to exercise appropriate business and professional judgment in performing its fiduciary duty.
The chapter 7 trustee is responsible for reviewing the sufficiency of the petition, matrix (list of creditors’ names and addresses), and statements and schedules. The trustee must make any objections to debtor exemptions within 30 days after the conclusion of the § 341(a) meeting or the filing of any amendment to the list or supplemental schedules unless the court grants an extension of time.
The trustee must also review all the aforementioned documentation for any evidence of substantial abuse under § 707 (b) that may provide the basis for a motion to dismiss. Also, the trustee has a duty under § 704 to object to the debtor’s discharge. The trustee is typically in the best position to initially identify fraud or criminal activity in chapter 7 cases. The trustee notifies the United States Trustee immediately when criminal activity is suspected.
Theron Morrison and the attorneys at the Morrison Law Group have helped 8,000 people file bankruptcy and gain a fresh start. We have helped over 20,000 Utah residents deal with all types of financial difficulties caused by all types of events. 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 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.