When a debtor goes to a creditors meeting or has exchanges with a bankruptcy trustee, the debtor should understand that the trustee's job is not all that easy or glamorous. To become a trustee, the person must have his personal finances in check also. The trustee's role is like opening a small business, where he is not a federal employee, but an appointed fiduciary.
The trustee keeps a relationship with a bank, which might assist in providing a computer and software, but the trustee must have a dedicated telephone line, post office box, office supplies, and a bond premium to take on the trustee position. At first the trustee gets about 40-60 cases/month, and must be able to survive without seeing any payments for work in the first six months. Not all of these cases pay the trustee any money because sometimes a debtor gets his bankruptcy case fee waived. In the San Francisco Bay Area, usually when the trustee does get paid, for non-asset cases, he gets around $60/case, and for asset cases, less than 8% of the funds he liquidates and distributes to creditors. Asset cases rarely get closed within a year so the trustee does not get paid until the case closes. It does not matter how hard the trustee works, if there are no assets to recover, the trustee cannot expect more than $60.
The trustee must pass a FBI security background check, focusing on criminal history, taxes, student loans. Once a trustee sets up office, he gets audited by the Office of Inspector General. Each trustee is appointed for 1 year, which is renewable.
The trustee role is not fit for the person who has a full time job or responsibilities that do not allow the flexibility to make his own hours to take care of case matters. The trustee must be available to track down assets, valuate assets like cars, real property, businesses. A business background is helpful when deciding whether to operate a debtor's business and to identify records on profitability. The trustee must be intuitive in spotting discrepancies, suspicious circumstances, and questionable explanations. For example, a debtor who lists no car, but car insurance should be questioned.
The trustee presents matters to the bankruptcy judge in cases, and must review the petitions to see if there is a need to shut down businesses, secure assets. The trustee may need to visit property on site to evaluate them. Sometimes assets are cases that need to be litigated. A part-time trustee takes on 30-40 cases each month, and a full time trustee takes on about 100 each month.
Understanding the bankruptcy process may not always be easy. Rinne Legal provides counseling to individuals, families and small businesses in financial difficulties. Call for a no charge initial consultation.
