The vast majority of bankruptcy
cases are filed by consumers rather than businesses. Most
consumer cases are filed under either Chapter 7 or Chapter
13 of the federal Bankruptcy Code. Approximately 70 percent
of cases are Chapter 7 liquidations filed by consumers, and
nearly 30 percent are Chapter 13 wage-earner repayment cases.
This fact sheet describes the United States Trustee's primary
responsibilities in Chapter 7 and Chapter 13 consumer bankruptcy
cases.
Chapter 7 Cases
In Chapter 7 cases, the United States Trustee litigates issues
that affect the integrity of the bankruptcy system. For example,
the United States Trustee might:
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Argue that granting the debtor a bankruptcy discharge
would constitute a "substantial abuse" of the bankruptcy
process.
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Object to excessive fees requested by the debtor's attorney.
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Take action against unlawful practices by bankruptcy
petition preparers--generally, non-lawyers who receive
a fee to prepare a consumer debtor's bankruptcy papers.
The United States Trustee also appoints and supervises the
Chapter 7 trustees who administer consumer debtors' bankruptcy
estates. In most Chapter 7 cases, no assets are available
for distribution to creditors. However, if a Chapter 7 debtor
has property that is not exempt from creditors' reach under
state or federal law, the trustee may sell that property and
distribute the money to creditors.
The United States Trustee appoints each Chapter 7 trustee
to a panel for up to one year, renewable at the United States
Trustee's discretion; these "panel trustees" are then assigned
to Chapter 7 cases on a blind rotation basis. The United States
Trustee supervises the panel trustees' administration of individual
debtor estates; monitors the trustees' financial record-keeping;
and imposes other requirements to ensure that the trustees
carry out their fiduciary duties.
Chapter 13 Cases
In Chapter 13 bankruptcy, the United States Trustee supervises
the private trustees who administer Chapter 13 cases. In this
chapter, the trustee does not liquidate the debtor's assets,
but instead helps organize the debtor's financial affairs
so the debtor may pay back some or all money owed to creditors.
A Chapter 13 debtor must propose a plan that devotes all
disposable income to debt repayment over a period of up to
five years. Most Chapter 13 cases are administered by "standing
trustees" appointed by the United States Trustee to administer
all cases filed in a particular geographic area.
As with Chapter 7 panel trustees, the United States Trustee
supervises the Chapter 13 standing trustees' administration
of individual bankruptcy estates; monitors the trustees' financial
record-keeping; and imposes other requirements to ensure that
the trustees carry out their fiduciary duties. The United
States Trustee's supervisory actions include:
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Periodically reviewing the trustees' case reports, budget
reports, bank account information, management skills,
court performance, and similar information.
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Ensuring that trustees are bonded.
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Ensuring that trustees are independently audited.
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Determining trustees' maximum annual compensation and
actual necessary expenses.
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Providing training for trustees.
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Monitoring trust account funds.
Contact: Public Information Officer
Executive Office for the United States Trustees
(202) 305-7411
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