The trustee in a New York bankruptcy case will probably be a nice person. My practice represents them, even. For consumers, though, the trustee’s congeniality might be confused with his or her responsibilities. The trustee’s responsibility is to the bankruptcy system, specifically the estate that’s created by the bankruptcy filing. Thus, the trustee does not represent the debtor—or the creditors for that matter. In practice, though, the more the trustee recovers for the creditors, the more he or she will be paid as a commission for the case. Consequently, the trustee’s interests are often opposed to the debtor’s. Here are a few reasons to be cautious and professional around the trustee.
One, the trustee won’t be very helpful. This should be understandable, but it does not go without saying. As the representative of the bankruptcy estate, the trustee has no duty to the debtor, so there should be no point in contacting him or her. The trustee is not able to give legal advice, and even simple case administration questions are better handled by either your attorney or bankruptcy court personnel.
Two, as discussed above, the trustee’s objectives for the bankruptcy estate can be adversarial to the debtor, for example in adversary proceedings. There, the trustee may attempt to limit the debtor’s ability to discharge a debt, object to exemptions, avoid any preferential transfers the debtor has made to creditors, or even try to dismiss the debtor’s case entirely if some wrongdoing is involved. Here are ten situations in which parties might file adversary proceedings against one another.
Three, contacting the trustee might pique his or her interest in your case—and not in a good way. If your query involves some kind of complicated financial matter, then that may only raise more questions in the trustee’s mind. One of the trustee’s responsibilities is to investigate the debtor’s financial dealings to ensure their appropriateness. Questions from the debtor may only intensify that investigation. Naturally, debtors assisted by counsel will not run into this situation, but unrepresented debtors might.
Four, sometimes the trustee may take the debtor’s side in a matter, like when a creditor has initiated an adversary proceeding against the debtor. Here it may be tempting to coordinate with the trustee, but it’s better to let your bankruptcy attorney represent you.
Finally, sometimes the trustee will contact a debtor, such as to ask for tax returns to gauge the debtor’s disposable income that he or she can pay in a chapter 13 case. In scenarios like these, it’s always best to contact your lawyer to ensure that there are no pitfalls raised by the trustee’s request.
You can read more about what you should know about the bankruptcy trustee here.
Trustees in bankruptcy are often professional, and they may even seem trustworthy to unrepresented bankruptcy debtors. However, the trustee has a different objective from you, and the only person you should be asking questions to is your lawyer.
For answers to more questions about bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced Brooklyn bankruptcy attorney Bruce Weiner for a free initial consultation.