The term, “trustee,” is used to refer to the person or entity who is the representative of the bankruptcy estate. The trustee is statutorily authorized to act primarily on behalf of the unsecured creditors of the estate. The trustee acts under the general supervision of the court and the U.S. Trustee (see below) or bankruptcy administrator. The U.S. Trustee is not the same person as the trustee who represents the interests of the creditors. The trustee is appointed under one of the bankruptcy chapters and can be an individual or a corporation.

The trustee is charged with reviewing the bankruptcy petition and the supporting statements listing the assets, liabilities and other information submitted with the filing. If the debtor decided to pay some of his or her debts or transfer some remaining funds to children, for example, the court might require that these payments be added back into the bankruptcy estate. However, only assets that were transferred or paid to creditors within a specified period of time before filing may be able to be recovered.

An experienced attorney will ensure that any payments made to creditors in advance of a bankruptcy filing are done within the appropriate parameters. This is a major reason why it is important to consult with an attorney as soon as possible. The pre-filing planning process is extremely important to the success of the entire case. Because such payments and transfers are deemed to belong to the bankruptcy estate, the attorney could suggest waiting to file until a certain amount of time has passed.

In other types of bankruptcy filings (under other Chapters), the trustee liquidates property of the estate and makes distributions of the funds to the creditors; or, works to develop a reorganization plan or repayment plan that protects the creditors’ interests while allowing a business to continue operating or an individual to continue working.

The term, “trustee,” might also refer to the U.S. Trustee who is an officer of the Justice Department. The U.S. Trustee is responsible for supervising the administration of bankruptcy cases, the estate involved and the trustee described above. The U.S. Trustee monitors many of the procedural requirements of the application and hearing processes.