The Role of the Bankruptcy Trustee

The Role of the Bankruptcy Trustee
by David Siegel

The bankruptcy trustee is the designated representative of the bankruptcy estate who exercises statutory powers, principally for the benefit of the unsecured creditors, under the general supervision of the court and the direct supervision of the U.S. trustee or bankruptcy administrator.



The trustee is a private individual or corporation appointed in all chapter 7, chapter 12, and chapter 13 cases and some chapter 11 cases. The trustee's responsibilities include reviewing the debtor's petition and schedules and bringing actions against creditors or the debtor to recover property of the bankruptcy estate.



In chapter 7, the trustee liquidates any non-exempt property of the estate, and makes distributions to creditors. The chapter 7 trustee will examine the debtor's pay advices and tax returns which are required to be submitted under the current law. The trustee will ask the debtor questions, under oath, to determine whether or not there are assets available for distribution. Trustees in chapter 12 and 13 have similar duties to a chapter 7 trustee and the additional responsibilities of overseeing the debtor's plan, receiving payments from debtors, and disbursing plan payments to creditors.



In the counties surrounding Chicago, Glenn Stearns is the standing Chapter 13 trustee. Mr. Stearns is a hands-on trustee who takes an active role in the bankruptcy process. He often conducts 341 meetings of creditors whereby he examines the debtor as it relates to the information contained in the schedules. He also appears before the Judge to offer his opinion with regard to confirmation issues. Mr. Stearns further appears at Trustee's motions such as the Trustee's motion to dismiss.



Additionally, Mr. Stearns has made the two-hour, post-filing, debtor education class available through his office. As long as the debtor's case has been assigned to Glenn Stearns as Trustee, the debtor can attend the class free of charge. The class is often scheduled on the same date and location as the debtor's 341 creditors' meeting. This is very convenient for the debtor in that there is no excuse not to take the class. Since the two-hour education is required prior to receiving a discharge, it makes sense to take the class early and get it out of the way.



Much of the debtor's case information is made available on the trustee's website. This feature is extremely helpful in determining which creditors have filed claims and to what extent those claims are being paid. Lastly, the trustee can be reach via telephone for any additional questions from either the debtor or his counsel.


David M. Siegel is the author of Chapter 7 Success: The Complete Guide to Surviving Personal Bankruptcy. He is a member of the American Bankruptcy Institute and currently practices bankruptcy law in Chicago and its surrounding suburbs. Additional information is available at Chapter 7 Bankruptcy.


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Filing Bankruptcy To Avoid Foreclosure

When is Filing Bankruptcy Appropriate to Avoid Foreclosure?
By Nick Adama

Filing bankruptcy to stop foreclosure is one of the most important decisions homeowners will make when faced with the loss of their homes. It is often the least-desirable option to save the home, due to the negative credit effects, but it can be considered as a last-ditch or backup effort if all else fails. Especially if the homeowners are running out of time and the lender is unwilling to stop the sheriff sale, bankruptcy may be one of the only options that would give the foreclosure victims some extra time and an opportunity to put together a longer-term solution to the problem. But knowing when to file bankruptcy and which type is most appropriate can be just as difficult of decisions as the initial one to file in the first place.

All homeowners, when considering bankruptcy to save their homes, should first consult with a lawyer before filing the actual paperwork with the courts. Having competent legal counsel ensures that the process is followed lawfully and that the foreclosure victims will be adequately represented in dealing with the court system and their creditors. In fact, consulting with an attorney about bankruptcy and other legal options should be one of the first things homeowners do in a foreclosure situation, whether they are seriously considering filing at this early point or not. Having the plan as a backup and not needing it is much more important that needing it and not having enough time to implement the plan. When the lender has hired attorneys to sue the homeowners for the house, it is in every homeowner's best interest to seek out legal advice that will help them understand the situation and what are their rights under the state foreclosure laws.

Of course, as we recommend over and over again, homeowners should do some research on their own before interviewing potential attorneys, so that they understand how the process will work and will be far less likely to find that they are being taken advantage of by an unscrupulous attorney. Having a basic understanding of the foreclosure process and what is involved in filing bankruptcy to stop foreclosure is essential for homeowners to keep control of their homes and the methods used to end the foreclosure. They should never blindly trust anyone, not an attorney, mortgage broker, or foreclosure specialist, without a basic understanding of how foreclosure works and how bankruptcy can affect the process.

Possibly the most important consideration in the decision to file bankruptcy is how expensive the payment plan will be. During a Chapter 13 that includes the house and all mortgage loans, the homeowners will be obligated to pay both the court-ordered plan and the regular monthly payments. For homeowners not yet in a stable financial position, this may just be too much to manage and they will be in danger of falling behind again. If they miss a payment during a Chapter 13 bankruptcy, the lender can move the court to dismiss the case and they will be able to proceed with the foreclosure as if the bankruptcy never happened. The bank simply picks up where it left off before the Chapter 13 was filed, and the homeowners can not rely upon this option in the future to save the home.

Another important consideration is how much income would be freed up if the homeowners kept the house of the bankruptcy and filed a Chapter 7 instead. This would wipe out some of their unsecured debts, like credit cards or personal loans, and may put enough money back in their monthly budget to afford to get back on track with the mortgage. It is important to consider how much money would actually be freed up, and if the mortgage company would accept a repayment plan where the homeowners pay extra every month until they are caught up. If the situation is right, this may be a more beneficial solution for all parties involved.

Of course, one of the most useful aspects of filing bankruptcy is simply that is allows the homeowners to put the entire foreclosure process on hold. The law lets them take a break while they seek protection under the court and establish a plan to get their payments back on track. Even if it is just a few days or weeks before the foreclosure auction, filing bankruptcy will immediately put the process on hold and stop the sheriff sale. In this case, the homeowners may be able to begin working on some other solution to the problem while they are given more time under the bankruptcy plan.

In most circumstances involving missed mortgage payments, filing bankruptcy to stop foreclosure should not be relied upon as the best solution. Especially if the homeowners' income has not recovered from the hardship that led to foreclosure, bankruptcy can result in a very expensive payment plan that is simply unrealistic. Other options should be considered both before and after filing, such as refinancing, selling, or giving the property back to the bank, depending on the specifics of the situation. Also, it is very important that homeowners seek out competent legal counsel during any part of the foreclosure process, but especially when they are considering filing bankruptcy to stop a sheriff sale or help them save their homes.

The ForeclosureFish.com website has been created to provide foreclosure help and advice to homeowners in danger of losing their homes. The site contains descriptions of various ways to save a home, including short sales, bankruptcy to stop foreclosure, and mortgage modification, among nearly a dozen total. Visit the site today for a free e-book and to begin learning how the foreclosure process works and how it can be avoided: http://www.foreclosurefish.com/

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Auto Repossessions and Bankruptcy

Auto Repossessions And Bankruptcy by David Siegel

What happens to an auto that is repossessed before, during or after a bankruptcy case? The answer will depend upon which type of bankruptcy or which chapter rather, that the debtor has filed. It also depends upon whether or not the debtor wants to recover the vehicle or simply let the vehicle go. The basic rule is as follows; the debtor remains the beneficial owner of the vehicle until such time that the vehicle is sold at auction. What this means is, the debtor has the ability to recover that vehicle and negotiate with the lender prior to the auto being sold at auction. This assumes of course that the debtor has filed a bankruptcy and that the automatic stay has gone into effect.



One typical case that I often see is a Chapter 13 bankruptcy filing where the vehicle is repossessed pre-filing. In that case, the auto finance company is often willing to negotiate for the return of the vehicle in exchange for certain documentation. That documentation usually includes proof of auto insurance and listing the finance company as the loss payee. In addition, the auto finance company will likely want to see a copy of the proposed chapter 13 plan indicating that the secured creditor is listed at the proper dollar amount at the proper interest rate. If all of those items could be shown, the auto lender is very likely to return the vehicle to the debtor without the debtor having to file an adversarial complaint in the bankruptcy court to recover the vehicle.



In a Chapter 7 case, whether not the debtor can recover the vehicle has to do with whether or not the debtor is current on the payments and/or can become current. If the debtor is behind on a vehicle in a Chapter 7 and the vehicle is repossessed pre-petition, the lender will simply bring a motion to modify the automatic stay, which will allow that lender to be able to keep the vehicle from the debtor. The debtor always has the ability to come up with the past due amount and become current to recover the vehicle, prior to the vehicle being sold at auction. The most important question that the Chapter 7 debtor needs to ask himself, is can I get current on that vehicle to the point where I can reaffirm the debt on that vehicle, continue to make monthly payments on time going forward, and maintain ownership of the vehicle. If the answer to any of those questions is, no, it really makes sense to surrender that vehicle back to the lender, because eventually the lender is going to move to modify the stay and repossess the vehicle down the road.



Additionally, if the debtor agrees to reaffirm the debt, and that it is subsequently repossessed post-petition, the debtor may in fact be on the hook for the rest of the balance or a deficiency on that vehicle unless the reaffirmation agreement can be rescinded in time.



Most people do not like to give up their autos. There is a pride factor, there is a love of the auto factor there is a transportation factor. The reality is this, if you cannot afford that vehicle, let it go. Do not reaffirm, do not stretch to fight to save the vehicle that you don't have the ability to pay going forward. Maybe your economic circumstances have not changed since the bankruptcy filing. Maybe you really didn't have the ability to afford that vehicle before the case was filed. These are all factors that a debtor must consider before agreeing to reaffirm a debt either under Chapter 7 or fighting to get the vehicle back and repaying it over time through a Chapter 13 bankruptcy case.



David M. Siegel is the author of Chapter 7 Success: The Complete Guide to Surviving Personal Bankruptcy. He is a member of the American Bankruptcy Institute and currently practices bankruptcy law in Chicago and its surrounding suburbs. Additional information is available at http://www.bankruptcy-lawyers-sanantonio.com/ .




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