Trustee's Duties in Bankruptcy

A Trustee has the following duties:

• Collect and reduce to money the property of the estate and close the estate as expeditiously as is compatible with the best interests of parties in interest;
• Be accountable for all property received;
• Investigate the financial affairs of the debtor;
• Examine proofs of claims and object, if necessary to the allowance of any claim that is improper.
• If advisable, oppose the discharge of the debtor;
• Furnish information concerning the estate as is requested by a party in interest;
• If the debtor's business is being continued, file periodic reports with any governmental tax collecting agencies;
• Make a final report and file a final account with the court of the administration of the estate; 
• File a bond with the court in favor of the United States conditioned on faithfully performing his or her duties;
• Ensure that the debtor begins making timely payments for administrative expenses and percentage fees for any private, standing Chapter 13 trustee;
• Ensure that the debtor makes timely payments to creditors.

In addition to the above duties, the trustee has the power to use, sell, or lease the property of the estate. When not acting in the usual course of business, the trustee may do so only after notifying all interested parties and holding a hearing.

The compensation structure does not provide the trustee with an incentive to pursue assets where substantial investigation is required and recovery is speculative. Thus, to attract the trustee to pursue assets in a so-called "no-asset Chapter 7," vendors must fund the trustee's recovery efforts.

Source: "Manual of Credit and Commercial Laws," edited by Charles M. Tatelbaum and John K. Pearson, available at the NACM Bookstore.