How to File a Complaint Against a Bankruptcy Trustee

By Nichole Hoskins

In every consumer bankruptcy case, a trustee is assigned to help facilitate the case. The trustee has a primary role in the administration of the case: the protection of assets and distributions to creditors. Because trustees play such a large part in a bankruptcy case, occasionally, other participants may object to the trustee's conduct. If there is suspected improper conduct by the trustee, and a formal complaint needs to be filed, there are a few things to consider beforehand.

The Trustee's Role

In a consumer bankruptcy case, it is necessary for an objective and qualified individual to evaluate the debtor's assets against the creditors' claims. Trustees take on that role. It is the trustee's responsibility to take control of any property that is available for distribution to creditors and not protected by any exemptions available under the Bankruptcy Code. If there is property in the estate, the trustee may liquidate it and then distribute the proceeds to creditors. If the bankruptcy involves a repayment plan, the trustee will review the plan to make sure it is fair and feasible, and monitor the plan's progress for the life of the bankruptcy case.

The Trustee's Tasks

When a bankruptcy action is filed under Chapter 7, 12 or 13 of the U.S. Bankruptcy Code, the court will automatically assign the case to a judge and a trustee. Both the judge and trustee monitor the case from filing through discharge or dismissal. The trustee, however, will have a more active role in the administration of the case and its ultimate outcome. According to the U.S. Department of Justice, the trustee program serves as the "watchdog over the bankruptcy process." U.S. trustees are distributed throughout 21 regions. In those regions, the U.S. trustee appoints and supervises the private trustees who handle the work of administering the bankruptcy cases. Private bankruptcy trustees tend to be lawyers or accountants from the region. Private trustees are required to be highly skilled in administrative and financial matters, but are not federal employees.

Get a free, confidential bankruptcy evaluation. Learn More

Basis for Complaints Against the Trustee

There may come a time when a debtor feels it necessary to file a formal complaint against the trustee handling the administration of her bankruptcy case. While a disagreement on legal issues will not usually provide the basis for a valid complaint, there may be grounds for a complaint if there are violations of the Bankruptcy Code. In addition to code violations, a consumer may file a complaint for unethical behavior, discrimination or criminal activity. Examples of inappropriate behavior by a trustee could include having a personal financial interest in the case, misappropriation of plan funds, or involvement in a relationship with a party to the case.

How to File a Complaint

To lodge a complaint against a private trustee in a Chapter 7, 12 or 13 bankruptcy case, a consumer debtor may contact the U.S. Trustee Program field office in his region. Consumers can locate contact information for the appropriate regional office online on the U.S. Department of Justice website. In the case of criminal activity, it would be appropriate to contact the local U.S. Attorney's Office and alert the court overseeing the case. Because private trustees are usually attorneys or CPAs and hold professional licenses in their state of practice, it might also be necessary to contact the state bar association or board of accountancy to file a separate complaint.

Regions Not Covered by the U.S. Trustee Program

Bankruptcy cases in Alabama and North Carolina are not under the jurisdiction of the U.S. Trustee Program; instead, they are administered by the office of the bankruptcy administrator for that region. While bankruptcy administrators are separate from the U.S. Trustee Program, they perform virtually the same duties. Questions about filing complaints in Alabama or North Carolina should be directed to the bankruptcy administrator in the district where the case is pending. Before filing a complaint with any agency, a debtor who is represented by an attorney should consult with her for advice.

Get a free, confidential bankruptcy evaluation. Learn More
Can a Bankruptcy Trustee Block a Discharge?



Related articles

What Constitutes Fraud in a Bankruptcy?

Bankruptcy proceedings allow businesses and individuals to reorganize or eliminate their debts. The United States Bankruptcy Code requires petitioning debtors to be open and honest with the court. Debtors who commit acts of fraud during the bankruptcy process face up to five years in prison and $250,000 in fines. The United States Department of Justice encourages people to report suspected bankruptcy fraud to it.

How Long After Filing for Bankruptcy Is the Next Step?

In both Chapter 7 and Chapter 13 bankruptcy cases, the first step after filing the petition and other documentation is the creditors' meeting. Whether the debtor is filing for debt elimination under Chapter 7 or a repayment plan under Chapter 13 affects how many days pass between filing and the creditors' meeting, at which debtors answer questions about their financial situations from their creditors and the court trustee.

What is a Notice of Dismissal of Bankruptcy?

Bankruptcy is a legal process by which debtors may restructure or obtain relief from overwhelming debts and get a fresh start on building a positive economic future. The bankruptcy court process has stringent rules and timelines to insure the debtor and creditors are treated fairly. Failure to abide by these rules may lead to dismissal of the bankruptcy, but in most instances, the debtor will be allowed to refile.


Related articles

The Average Cost of Chapter 7

Filing a Chapter 7 bankruptcy case may seem like a costly endeavor. The fees and costs associated with a bankruptcy ...

What Is the Role of a Bankruptcy Administrator?

A bankruptcy administrator performs similar functions that U.S. trustees perform in the remaining 48 states. Congress ...

The Advantages of Using a Lawyer for Bankruptcy

Bankruptcy is a legal status for which individuals and businesses may both file. Ultimately, individual debtors and ...

How to Find Out if a Bankruptcy Filing Has Been Dismissed in Alabama

A dismissal ends your bankruptcy case and can have severe consequences. For example, if your bankruptcy case is ...

Browse by category
Ready to Begin? GET STARTED