Your trustee is closely involved with every step of your 3-to-5 year Chapter 13 case. For the case to go smoothly, it helps to understand the trustee’s roles.
The trustee’s role in your case can genuinely be confusing, because he or she does indeed have a number of different roles. And some of them seem to be contradictory.
At the beginning of your case, the trustee carefully reviews your proposed payment plan and the rest of the documents, asks questions of you and your attorney at the “Meeting of Creditors,” communicates with your attorney about changes to the plan, and overall is closely involved in the process of getting the initial court approval of your plan. The trustee reports to the bankruptcy judge about whether or not the plan should be approved. That recommendation doesn’t always carry the day, but it is generally the goal to appease or persuade the trustee in your favor.
The trustee’s job is to have you pay as much as the law requires you to pay to your creditors, based on your budget, assets, and other considerations. In this role he or she is more on the side of the creditors than on your side, and it’s important to keep that in mind. For example, it’s the trustee’s job to object to a monthly expense in your budget that appears unreasonably high, in order to reduce your allowed expenses and increase how much you pay to your creditors.
Disburser of Payments
The trustee accepts your monthly and any other plan payments, and then pays out this money according to the terms of your court-approved Chapter 13 plan.
Throughout the course of your case, the trustee and his or her staff monitors your plan payments, and files an appropriate motion with the court if you stop making payments. The trustee also tracks your compliance with any other obligations—such as providing annual tax return copies, and other special requirements laid out in your plan—and informs the bankruptcy court if you’re not in compliance.
During your case, the trustee oversees whether you are paying all you can afford, mostly by reviewing your annual tax returns. If your income rises significantly, the trustee can require your plan to be amended to account for the increase. And if your income decreases, or your expenses significantly increase, or other adverse changes occur requiring you to amend your plan to adjust for such changes, the trustee reviews these changes and either approves them or raises objections.
In the midst of all these roles, the trustee is also supposed to help you successfully get through your Chapter 13 case. The Bankruptcy Code specifically says that the “trustee shall—advise, other than on legal matters, and assist the debtor under the plan.” Each trustee interprets this task of assisting you differently. So follow your attorney’s suggestions about whether and how your particular trustee may be able to provide some help. Most trustees do genuinely want you to have a successful Chapter 13 case, and can sometimes be a resource for getting you there.
One Trustee’s Summary
Here’s a good final word on this, from the website of one of the local Chapter 13 trustees:
“The role of the chapter 13 trustee is unique. The trustee does not take into his or her possession or control property of the estate. The trustee does not operate the debtor’s business. Rather, the trustee receives payments from the debtor, and disburses those payments to the debtor’s creditors pursuant to the debtor’s plan. The chapter 13 trustee does, however, counsel with and advise the chapter 13 debtor on all matters relating to the plan other than legal matters. In short, the chapter 13 trustee is an amalgam of social worker and disbursing agent.”
Each Chapter 13 trustee balances these various roles somewhat differently. This blog post gives you an idea of the balancing that they must do as they do their job.