Understanding Bankruptcy Trustees in New Jersey: A Comprehensive Guide

Explore the crucial role of Bankruptcy Trustees in New Jersey with Wenarsky and Goldstein, LLC. Learn about their responsibilities and how they impact your bankruptcy proceedings.

What Is a Bankruptcy Trustee?

A bankruptcy trustee is a court-appointed individual responsible for overseeing bankruptcy proceedings. They manage the case, review financial documents, and ensure creditors are treated fairly.

While trustees play a crucial role, it’s essential to remember they are not advocates for the debtor. It’s wise to work with a bankruptcy lawyer who is experienced in handling bankruptcy procedures and communicating with the trustee assigned to your case. Your bankruptcy attorney can ensure your interests are represented effectively throughout the process.

The Law Offices of Wenarsky and Goldstein, LLC, has extensive experience in representing New Jersey residents in the bankruptcy process and obtaining the most favorable outcomes. The process of filing for bankruptcy can get stressful, confusing, and complicated. Working with our bankruptcy attorneys can be crucial to get the relief you need in this challenging time.

The role of trustees in a Bankruptcy Case

The trustee’s role differs depending on the type of bankruptcy filed:

  • Chapter 7: Chapter 7 bankruptcy involves liquidating the debtor’s bankruptcy estate assets to repay debts. In this bankruptcy type, the trustee manages the sale of the assets and the distribution of proceeds to creditors. The trustee is also required to determine if the debtor meets the criteria for a discharge and whether or not the debtor is entitled to one.

  • Chapter 11: A bankruptcy filed under Chapter 11 (or Sub-Chapter V bankruptcy for small businesses) provides for the reorganization of business debts. Here, the trustee is not usually assigned to the case unless the case is filed under Subchapter V. Instead, the debtor assumes the role of the trustee to become what’s known as “debtor in possession.” In cases where creditors or the U.S. trustee bring claims of fraud, mismanagement, or incompetence, the court may appoint an independent trustee to manage the bankruptcy case and the business.  In Subchapter V cases, unlike in other bankruptcy matters, the Subchapter V Trustee’s role is to aid the debtor in creating a consensual plan rather than to pay debts or administer assets.  The Subchapter V trustee’s role is more as a neutral party rather than an adversary.

  • Chapter 12 bankruptcy: Chapter 12 bankruptcy is designed for family farms and fisheries looking to reorganize and settle their debts. In this bankruptcy type, the trustee monitors the implementation of the repayment plan, collects and distributes payments to creditors, and ensures compliance with bankruptcy law and court rules.

  • Chapter 13: Similar to Chapter 12, Chapter 13 trustees work with the debtors, usually individuals, to ensure they develop a feasible repayment plan and make the required plan payments on time.

The primary duties of trustees across all bankruptcy types include supervising and managing the process and ensuring compliance with bankruptcy laws.

The Appointment Process

Generally, when a person files for bankruptcy, the U.S. trustee assigns a trustee whose role is to administer the case and liquidate the debtor’s non-exempt assets. However, in some bankruptcy cases, such as Chapter 11 bankruptcy, a trustee is only appointed at the request of the U.S. trustee or creditors. On motion by the U.S. trustee or creditors, the court will schedule a hearing and order the appointment of a trustee for the case.

Interacting with a Bankruptcy Trustee

Throughout the process, debtors will frequently interact with their case trustee. The trustee will assess your petition and financial records, such as tax returns, to determine your eligibility. They can reach out to you for additional documentation when necessary.

During the meeting of creditors, also known as the 341 Meeting, the trustee and creditors will ask you questions, and you will answer under oath. You are expected to maintain open and honest communication with your trustee and creditors.

If you are going through a reorganization bankruptcy, your trustee will be involved in the development and approval of the repayment plan. If you are a debtor in Chapter 7 bankruptcy, your trustee will assess your non-exempt assets and be in charge of their sale. The trustee or their staff attorney may file a motion objecting to your exemption claim or repayment plan for a cause, such as violating bankruptcy laws or creditors not receiving adequate payment.

Throughout these procedures, you will be working with the trustee to reach a favorable conclusion for your bankruptcy case. It may be in your best interest to let a qualified bankruptcy attorney handle this and every aspect of your case to avoid costly mistakes and maximize your chances of success.

The Trustee’s Role in Meetings and Hearings

The 341 meeting, derived from Section 341 of the Bankruptcy Code, is commonly known as the meeting of creditors. It is a mandatory meeting held between 21 and 50 days from the date of filing. The purpose of this meeting is to determine the debtor’s financial position and to confirm the facts stated in the bankruptcy petition.

Since September 1, 2023, 341 meetings in New Jersey have been held virtually. Before the meeting, you will be required to send some documents to the trustee so they can verify your Social Security number. The same documents must be with you during the meeting.

The trustee will place the debtor under oath before questioning can begin. During the examination, the trustee asks questions about your income, assets, debts, and repayment plans where applicable. Questions regarding the accuracy of the bankruptcy petition will also be asked.

Up to 45 days after the meeting of creditors, a confirmation hearing must be held for cases involving Chapter 13 or 11. In confirmation hearings, the bankruptcy court judge determines whether to approve or reject your repayment plan.

Let the Law Offices of Wenarsky and Goldstein, LLC, Help You

Bankruptcy trustees in New Jersey play a vital role in ensuring that you are able to pay creditors in the most plausible way. However, it is crucial to understand that they are not on your side. Their job is to ensure both you and your creditors’ interests are equally represented. You need a bankruptcy attorney who is dedicated to your success and yours only.

Our experienced New Jersey bankruptcy attorneys at the Law Offices of Wenarsky and Goldstein, LLC, are here to guide you through the bankruptcy process and help you obtain the most favorable outcome. Our law firm has vast experience handling cases in all three New Jersey bankruptcy courts.

We offer personalized legal assistance to individuals and businesses across the state. If you are considering bankruptcy, reach out to us today and schedule a consultation.

Call the Law Office of Wenarsky & Goldstein

At the Law Offices of Wenarsky & Goldstein, LLC, our New York and New Jersey attorneys are experienced and knowledgeable in bankruptcy, estate planning and probate, guardianship, special needs planning, and real estate law. To learn more about how we can assist you with your legal needs, call us today at 973-453-2838.