You’ll be much more comfortable during your bankruptcy case if you know the system’s cast of characters.
The Debtor
This is the “person” for whom a bankruptcy case is filed. It can be an individual or a couple, and can also be a corporation, partnership, or some other kind of business entity. As the debtor you have to qualify to file bankruptcy—sometimes qualifying is very easy, other times quite difficult. See Section 109 of the Bankruptcy Code on “Who may be a debtor,” and also Section 521 on “Debtor’s duties.” Ultimately, the debtor’s primary duty is to deal honestly with the bankruptcy system in order to get the relief needed.
The Creditors
These are the businesses or individuals to whom the debtor owes money—owes a claim. A creditor’s right to money is usually for a definite amount, based on a contract or transaction with easily determinable dollar amounts. Likely you owe all or most of your creditors a definite dollar amount. But a creditor’s right to money can also be “unliquidated”—for an unknown amount—such as a personal injury from a vehicle accident. Or it can be disputed, such as one involving a vehicle accident in which it’s unclear who was at fault.
Creditors’ debts can be secured by collateral such as your home or vehicle, or something else you purchased, or their debts can be unsecured. One of the biggest issues in bankruptcy is how collateral is treated—how the rights of the debtor and creditor are balanced against each other. But unsecured creditors of different types can be treated very differently as well, such as those owed child support, income taxes, or student loans. Creditors in bankruptcy must be treated the same, but ONLY if they are in the same legal category.
The Bankruptcy Clerk
The clerk is the main paper-pusher in the bankruptcy system. This is the office which takes care of most of the clerical tasks within the bankruptcy court, much of which is now done electronically. Your attorney files your case (via the internet) with the clerk’s office, which maintains your bankruptcy file, sends out most of the important formal notices, and takes care of other similar tasks. As a debtor represented by an attorney, you will likely never deal directly with the clerk’s office, other than get their official mailings.
The Bankruptcy Judge
A judge is assigned to each bankruptcy case, but in both Chapter 7 and Chapter 13 you will not likely see him or her. In a very straightforward Chapter 7 case, the judge actually has very little to do, only getting involved if there a dispute that needs resolution. In a Chapter 13 case, the judge is personally involved in the approval of your plan, in resolving any disputes about it, and then in dealing with other developments during the course of your case.
Bankruptcy judges are appointed to terms of 14 years, unlike other “real” federal district court judges who are appointed for life. Bankruptcy judges are technically merely “judicial officers of the United States district court.”
The U.S. Trustee
This is someone else who generally flies under the radar in most bankruptcy cases. This office is the mostly behind-the-scene enforcer within the bankruptcy system. Its website describes its role:
The United States Trustee Program is a component of the Department of Justice that seeks to promote the efficiency and protect the integrity of the Federal bankruptcy system. To further the public interest in the just, speedy and economical resolution of cases filed under the Bankruptcy Code, the Program monitors the conduct of bankruptcy parties and private estate trustees, oversees related administrative functions, and acts to ensure compliance with applicable laws and procedures. It also identifies and helps investigate bankruptcy fraud and abuse in coordination with United States Attorneys, the Federal Bureau of Investigation, and other law enforcement agencies.
One of the most important jobs of your attorney is to avoid you ever needing to hear from the U.S. Trustee!
The Chapter 7 Trustee
This IS somebody who you will meet if you are filing a Chapter 7 case, although usually not for more than 5 or 10 minutes. This trustee’s job is mostly to determine if you have any assets which are not protected (which are not “exempt”). He or she does that in part by presiding at your “meeting of creditors” about a month after your case is filed. In most cases, everything you own IS “exempt,” so the trustee makes that determination, largely ending his or her role in the case. In the somewhat unusual case in which some of your assets are not “exempt,” your Chapter 7 trustee will have a right to take possession of them, sell them, and distribute the sale proceeds to the creditors based on a statutory schedule of priorities.
A Chapter 7 trustee is assigned to your case by the U.S. Trustee from a “panel” of local Chapter 7 trustees. Your attorney cannot influence which trustee you get.
The Chapter 13 Trustee
This trustee is deeply involved in your case from its beginning to its end. Because there is usually only one “standing” Chapter 13 trustee assigned to any particular geographic area, your attorney will know in advance who it will be (unlike with Chapter 7 trustees). The Chapter 13 trustee—usually assisted by a staff attorney or two and a number of employees—reviews the Chapter 13 payment plan proposed by you and your attorney, presides at your “meeting of creditors,” and may raise objections to your plan with the bankruptcy judge. Then once a plan is approved by the court—sometimes with adjustments to it to meet any trustee objections—the trustee receives your plan payments and distributes them to the creditors as designated under your plan. The trustee can also file motions at court if you do not make payments as required by your plan or do not meet some other requirements. The trustee also tells the court when you have successfully completed all your plan requirements so that your remaining debts can be discharged and your case closed.
The Chapter 13 trustee has a number of different roles, some of which are at least somewhat contradictory. His or her job is to maximize how much your creditors get paid by you, but at the same time usually he or she genuinely wants you to complete your case successfully. And different Chapter 13 trustees balance these conflicting roles differently. So talk to your attorney about how you should treat your own trustee as a “friend” versus as a “foe.”