NJ Bankruptcy Trustees' Duties and Responsibilities
- by New Jersey Bankruptcy Attorney Bolko Rokicki
When they are assigned to oversee a Bankruptcy Estate, the Trustee's duties are generally to determine whether a debtor is entitled to a discharge and to diligently pursue any assets that are of value to the Estate.
Judging Whether a Debtor Is Entitled to a Discharge
In judging whether a debtor is entitled to a discharge, the Trustee will generally look to see if the debtor:
- has filed any previous bankruptcies;
- passes the Means Test;
- filed the bankruptcy petition in bad faith or fraud;
- incurred debt through fraud;
- intends to hinder or delay the bankruptcy process;
- fails to cooperate with the Trustee;
- conceals or destroys property;
- intentionally provides false information or testimony; or
- has otherwise failed to comply with the bankruptcy process.
If the Trustee determines that the debtor is not entitled to a discharge, he will bring a motion before the Judge to either limit the bankruptcy discharge to certain debts or bar the debtor from receiving any discharge whatsoever. Moreover, if the Trustee learns of fraud after the debtor has already received a discharge, he may petition the Court to revoke the debtor's previous discharge.
Pursuing Assets of Value to the Bankruptcy Estate
When reviewing a bankruptcy petition, Trustees are always on the lookout for any significant assets that can be distributed to creditors. Since debtors only have a limited number of exemptions, high-value assets such as cars and houses are particularly scrutinized by Trustees. In the event that a Trustee finds an asset that cannot be exempted, he will likely do the following:
- identify the value of the asset using an appraiser;
- determine whether the asset is likely to bring value to the Bankruptcy Estate after fees incurred for appraising/listing/auctioning off the asset;
- file a notice with the court if the Trustee determines that there is an asset worth pursuing;
- ask that creditors file Proofs of Claim showing the amounts they are owed by the debtor;
- examine Proofs of Claim to determine their validity;
- liquidate and disburse the asset on a pro rata basis to creditors with valid Proofs of Claim, based on the order of distribution.
If the Trustee decides there are no assets worth pursuing (a common feature of many Chapter 7s), then he will issue a Notice of Abandonment to the Court. This is a good thing- it means that the Trustee is formally abandoning any right that the Bankruptcy Estate has in the debtor's non-exempt property. This means that the debtor is able to keep his property, even if it wasn't able to be exempted.
Due to the complexity of bankruptcy law and the severe consequences of any mistakes made in your bankruptcy petition (potentially resulting in a denial of discharge or losing assets that could have been exempted), it is highly recommended that you retain an experienced New Jersey bankruptcy attorney to represent you in NJ Bankruptcy Court. For a free bankruptcy consultation, call the Rokicki Law Firm at 973 - 671 - 8529. Free yourself from debt today!