What is A Bankruptcy Trustee and What do they do in Saint Paul Minnesota?

Posted by Wesley Scott on May 17, 2023 at 5:30 AM
Wesley Scott

 shutterstock_1894322668-3When a person files a chapter 7 or chapter 13 bankruptcy case, they are asking the bankruptcy court for relief from their debts.  In a chapter 7 bankruptcy case, a person is completely relieved from most of types of debts by receiving a legal “discharge” of their debt, typically within 3 to 4 months after their case is filed, without the need for making any payments to their creditors. In most chapter 7 cases, the “debtor” (what you call a person who files for bankruptcy) is able to keep most, if not all, of their property in exchange for receiving their discharge. In a chapter 13 case, the debtor does not have to give up any property, but must make regular payments, each month, towards their debts, in a three to five year repayment plan, after which they receive a discharge of most, if not all, of their remaining debts. 


A bankruptcy trustee is an individual appointed to review the debtor’s chapter 7 or chapter 13 case to ensure the debtor’s creditors are treated fairly and that the creditors are paid the amount to which they are legally entitled (if anything at all) in exchange for the debtor’s right to receive a legal discharge of their debts. The trustees that actually handle the debtor’s case are employed under the supervision of the United States Trustee’s office. The US Trustee’s office is a part of the United States Department of Justice. Although it is not a requirement for a Trustee to be an attorney, many chapter 7 trustees are lawyers, and the chapter 13 trustee’s office has a number of attorneys who work for their office.

In a chapter 7 case, the trustee is analogous to the administrator of the estate of someone who has passed away. When a person passes away and leaves property, that property is considered that person’s “estate.”  The administrator of the estate has the responsibility of paying the deceased person’s creditors from the estate money and property, and then, distributing the remaining property and money amongst the deceased person’s beneficiaries or heirs. Similarly, in a chapter 7 case, when a person files their case, all of their property (with some limited exceptions) are considered “property” of the bankruptcy estate. 

The chapter 7 trustee, like the administrator of the deceased person’s estate, is tasked with the responsibility of managing the debtor’s property to be distributed to the debtor’s creditors. In many chapter 7 cases, debtors are able to legally “exempt,” or protect, most, if not all, of their property from creditors. It is the chapter 7 trustee’s job to take the debtor’s “nonexempt” property to liquidate it (sell to convert to cash) to pay the creditors from the proceeds. In many of these cases, the debtor is often able to “buy back” the nonexempt property of the bankruptcy estate from the trustee in order to keep the property. 

In a chapter 13 case, the bankruptcy trustee is not allowed to take the debtor’s property. Instead, the chapter 13 trustee is tasked with the responsibility of collecting the debtor’s monthly payments, and distributing the money amongst the creditors who file claims with the court. The chapter 13 trustee’s job is to ensure the debtor’s chapter 13 repayment plan meets all requirements under bankruptcy law, before recommending that the debtor’s chapter 13 plan be confirmed, or legally approved, by the court.  



Bankruptcy law can be complicated. For this reason, when considering filing for either a chapter 7 or chapter 13 bankruptcy, it is a very good idea to first consult with an experienced bankruptcy attorney. LifeBack Law Firm now has a new office located in the historic Cathedral Hill neighborhood of Saint Paul, specifically located at 370 Selby Ave, Suite 224, Saint Paul MN 55102. Come visit us there, or online, at lifebacklaw.com!


Topics: Bankruptcy Trustee Definition, What Does Bankruptcy Trustee Mean?, What are the functions of a trustee in bankruptcy?

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