What Is the Role of a Bankruptcy Administrator?

By David Carnes

A bankruptcy administrator performs similar functions that U.S. trustees perform in the remaining 48 states. Congress established the bankruptcy administrator program in 1986. At one time, all bankruptcy courts used bankruptcy administrators. Now that the U.S. Trustee program has been established, however, the only states that still use bankruptcy administrators are Alabama and North Carolina.

Appointment

The U.S. Trustee program is under the jurisdiction of the U.S. Department of Justice, and U.S. Trustees are appointed by the president of the United States. By contrast, the bankruptcy administrator program is under the jurisdiction of the Administrative Office of the United States Courts, part of the judicial branch. The duties of bankruptcy administrators in Alabama and North Carolina, however, are similar to the duties of U.S. trustees in other states. These duties include appointing a panel of private trustees to serve as bankruptcy trustees in chapter 7 cases, and in some cases, appointing the bankruptcy trustee in Chapter 13 cases.

Credit Counseling and Debtor Education

To file for bankruptcy, the debtor must complete a credit counseling course offered by an approved entity. In Alabama and North Carolina, it is the job of the bankruptcy administrator in each judicial district to approve these entities, and to publicize them so that debtors will have access to them. Debtors must also complete a debtor education course before receiving a discharge, and it is the bankruptcy administrator's job to approve and publicize these entities.

Get a free, confidential bankruptcy evaluation. Learn More

Chapter 7 Cases

In a Chapter 7 bankruptcy, the debtor's nonexempt assets may be sold and the proceeds distributed to creditors. The bankruptcy trustee, appointed by the bankruptcy administrator, is the person who investigates the debtor's finances, collects the debtor's nonexempt assets, sells the assets, collects the proceeds and distributes them to creditors in accordance with the Bankruptcy Code and the direction of the bankruptcy court. The bankruptcy administrator supervises this process.

Chapter 13 Duties

In a Chapter 13 bankruptcy, the debtor repays his debts under a repayment plan approved by the court, and any remaining debts are discharged at the end of the repayment plan. The bankruptcy trustee is appointed by the bankruptcy administrator in Alabama and North Carolina. He examines the repayment plan to make sure it complies with the Bankruptcy Code, receives monthly payments from the debtor and makes sure the debtor makes payments as required. The bankruptcy administrator supervises this process.

Supervisory Duties

When supervising bankruptcy cases, the bankruptcy administrator guards against abuses, makes sure that bankruptcy plans comply with the law and monitors the bankruptcy trustee's performance of his duties. He is entitled to raise any issue of bankruptcy law before the bankruptcy court, and he may argue his case on behalf of the public. He is also responsible for monitoring and reporting suspected criminal activity in bankruptcy cases. He is not allowed to provide legal advice.

Get a free, confidential bankruptcy evaluation. Learn More
How to File a Complaint Against a Bankruptcy Trustee

References

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 Does the Bankruptcy of a Trustee Affect the Trust?

A trustee's declaration of bankruptcy can harm the interests of trust beneficiaries if the trust instrument empowers the trustee to self-direct unlimited and unrestricted distributions from the trust. Such broad powers expose the trust assets to the reach of the trustee's creditors in a bankruptcy case, depleting the amount of distributions available to named beneficiaries.

Provisions of Chapter 13 of the Federal Bankruptcy Laws

Chapter 13 bankruptcy is a form of personal bankruptcy that allows an individual’s debt to be adjusted if he has a regular income. Unlike Chapter 7 bankruptcy, a Chapter 13 proceeding allows the debtor to keep property and pay debts over time rather than liquidating assets to pay creditors. One advantage of Chapter 13 bankruptcy is the opportunity for the debtor to save his home from foreclosure and even stop a foreclosure already in progress.

Related articles

Can a Bankruptcy Trustee Block a Discharge?

A bankruptcy trustee is a neutral professional appointed by the federal bankruptcy court to administer your bankruptcy ...

In Nevada, How Long Does it Take for a Bankruptcy to Be Discharged After the Hearing?

If you're a Nevada resident contemplating bankruptcy, you may be wondering how long the process will take. Although ...

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 ...

Is it Better to Be on Disability When Filing for Chapter 7 or 13?

If you are on Social Security disability and considering filing for bankruptcy, it can be difficult to choose between ...

Browse by category
Ready to Begin? GET STARTED