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What role does the U.S. Trustee play in the bankruptcy process?

Once the important decision to file for either Chapter 7 or Chapter 13 bankruptcy is made, individuals may soon find themselves in unfamiliar territory, attending proceedings, encountering parties and hearing terms that are all entirely foreign to them.

While their legal representative will do their best to help them understand everything they encounter, it can nevertheless be helpful to have a core foundation of knowledge upon which to build. To that end, today's post will take a closer look at the United States Trustee and the role they play in the consumer bankruptcy process.

Historical background

The U.S. Trustee Program was launched back in 1978 as a pilot program covering 18 districts with the specifics set forth in the Bankruptcy Reform Act. The effort was subsequently expanded to 21 regions across the country, such that all federal judicial districts are now covered (excepting North Carolina and Alabama).

The task of appointing both U.S. Trustees and Assistant U.S. Trustees is delegated to the U.S. Attorney General, while the program's substantive operations and administrative functions are managed by the D.C.-based Executive Office for U.S. Trustees.

As for funding, the program relies on the U.S. Trustee System Fund, which is subsidized in large part by the fees paid by businesses and individuals seeking bankruptcy protection.

Duties of the U.S. Trustees

The primary objective of the U.S. Trustee Program is to serve as a sort of watchdog for the bankruptcy process. Indeed, its mission statement indicates that its purpose is to "promote the integrity and efficiency of the bankruptcy system for the benefit of all stakeholders -- debtors, creditors, and the public."

As for the duties of individual U.S. trustees, they are tasked with the following:

  • Appointing and overseeing private trustees to handle Chapter 7, 12 and 13 bankruptcy cases, and serving in this role when private trustees are unavailable
  • Preventing abuse and fraud, and enforcing the provisions of the U.S. Bankruptcy Code
  • Ensuring the proper and efficient administration of bankruptcy estates, and the reasonableness of professional fees
  • Submitting matters for investigation and/or prosecution when appropriate
  • Reviewing both applications for services and disclosure statements
  • Arguing matters pertaining to the U.S. Bankruptcy Code and the rules of procedure in court

Here's hoping this information has proven enlightening. We'll continue this discussion next time, examining the duties of the U.S. trustee as they relate to Chapter 7 and Chapter 13.

If you would like learn more about the fresh start provided by bankruptcy, consider speaking with a skilled legal professional.

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