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Chapter 7 Trustee’s Duties and Obligations

In general, the trustee is required to determine whether the debtor meets all of the criteria for a chapter 7 discharge and whether the debtor is entitled to a discharge.

Click here for more information about Chapter 7 requirements

The trustee must determine whether the debtor has any unexempt and/or valuable assets which may be sold. In the event of the sale of property, the trustee must properly administer the proceeds of the sale, and disburse the funds, pursuant to the bankruptcy code. The trustee must:

  • ensure that the debtor performs his intentions as specified in his bankruptcy petition
  • investigate the financial affairs of the debtor
  • examine the creditor’s proof of claim
  • file with the court a notice indicating whether the trustee has either found an asset which he wishes to sell
  • or in the alternative, his intention of abandoning his right to the sale of any property

The trustee’s filing of a Notice of abandonment of the debtor’s property, is positive for the debtor. This means that the trustee is abandoning her right in all of the debtor’s property, which results in permitting the debtor(s) to keep all property. Furthermore, the trustee must file a statement with the court indicating whether the debtor failed the statement of current monthly income analysis/means test. The means test analysis is explained in a separate portion of the website. In the event the debtor fails the means test, the trustee has an obligation to file the appropriate documents with the court requesting to dismiss or convert the case to another chapter. In general, failing the means test signifies that the debtor has excessive monthly disposable income and does not meet the chapter 7 criteria.

The trustee has an obligation to oppose the discharge of the debtor, in the event that the trustee believes that there is sufficient monthly disposable income, or for any other advisable reason, under the bankruptcy code. The trustee may oppose a discharge based on any violation of the bankruptcy code, which is includes, but not limited to the debtor’s following acts:

  • filing a petition in bad faith, or fraud
  • incurring debt by fraud
  • intent to hinder or delay the process
  • failure to cooperate with the trustee’s directions
  • conceal or destroy property
  • intentionally provide false information or testimony
  • or otherwise fail to comply with the bankruptcy requirements

Also, the trustee may file the appropriate documents with the court requesting to revoke a discharge, when necessary. A trustee may operate the debtor’s business, if the result would benefit the creditors of the bankruptcy estate.

Contacting a Chapter 7 Bankruptcy Attorney in New Jersey

If you are dealing with a NJ bankruptcy case, you should consult with a lawyer. A skilled Chapter 7 bankruptcy attorney will be able to help you navigate the complex bankruptcy proceedings and ensure that you are compliant to bankruptcy laws. For a free consultation, fill out our online contact form or call us at 866.503.5655.