The trustee's primary role is to maintain the integrity of the bankruptcy system. The trustee makes sure that debtors properly disclose assets, and decides whether a discharge would be proper depending on the circumstances. Trustees also administer bankruptcy estates by collecting, liquidating and distributing non-exempt assets in Chapter 7 bankruptcy cases. Essentially, the trustee collects all property not protected under the U.S. Bankruptcy Code, sells it, and distributes the proceeds to creditors.
In Chapter 13 cases, trustees evaluate debtors' repayment plans and make recommendations to the bankruptcy court as to whether the plan would be fair to creditors. If the plan is approved, the trustee will collect plan payments and distribute them accordingly.
Trustees may also take action against non-attorneys who engage in unlawful practices in preparing bankruptcy petitions, and monitor fees imposed by bankruptcy lawyers.
During the meeting of creditors, the trustee will ask debtors a series of questions relating to their petition. Most of them are procedural, to ensure the debtor understands their rights under the law and that they accurately included information in their petition. Trustees may also probe further to root out any false information or intent to engage in bankruptcy fraud. Debtors are questioned under oath, but their attorneys are present and may interject to make sure their clients understand the trustee's questions.
Most meetings between the debtor and the bankruptcy trustee take between 15 and 25 minutes. Invariably, the trustee may need additional information from the debtor (or the attorney). In these instances, the meeting may be continued.
For more questions about the role of the bankruptcy trustee and what to expect in a 341 hearing, contact an experienced bankruptcy attorney.