The question comes frequently to our office – who is involved when someone files for bankruptcy? In reality, less parties are usually involved than most people think. Let’s discuss who is involved when someone files for bankruptcy.
The debtor is the primary person (or persons) involved when filing for bankruptcy. The debtor is the person or company who needs their debts relieved. Usually the debtor files a bankruptcy petition asking the court for bankruptcy relief. Debtors range from a single filer, to a married couple, all the way to the largest corporations in America.
The Case Trustee (or Interim Trustee) is the person in charge of your Chapter 7 or Chapter 13 case. The trustee makes sure that your case is handled correctly, making sure that all bankruptcy rules are followed. The Trustee is also responsible for your property during the bankruptcy case, making sure that all property (or income) that should go to your creditors is properly turned over to repay your debts.
You are always assigned a bankruptcy Judge during your bankruptcy case. However, most cases never come up in front of the Judge because there are not disputes in most bankruptcy cases. The Bankruptcy Court is the forum and mechanism in which you file your case. The bankruptcy court’s clerk office is responsible for receiving your bankruptcy petition request and managing the basic administrative functions of your bankruptcy case.
The United States Trustee is the “sheriff in town” during the bankruptcy process. This party makes sure that all bankruptcy rules are being followed and that no bankruptcy fraud is occurring. This office is also required to randomly “audit” a certain amount of bankruptcy cases each year just to make sure that the system is being properly followed through a “spot checks.” Their direct involvement is not common on most bankruptcy cases. The United States Trustee also takes a more active role in larger Chapter 7 and Chapter 11 bankruptcy business cases.
The other major party – perhaps the most important in some ways – are the creditors. All creditors of the debtor are notified when a bankruptcy is filed. The creditors are allowed to make objections in very limited situations. All creditors must file a proof of their claim if they want to be paid by any amounts collected during the bankruptcy process. However, in most Chapter 7 cases, the creditors can do very little during the process. In the majority of Chapter 7 cases, the creditors do very little except just receive their bankruptcy notice and then write-off or cancel their debt when they receive the Chapter 7 discharge notice.