In Bankruptcy court, you will almost never see a judge. Bankruptcy Judges exist, but they are kept hidden from view and the public never sees them. Your bankruptcy hearing is presided over by a Bankruptcy Trustee.
Your Bankruptcy Trustee is a very important person. He or She is appointed by the Department of Justice to manage something called “The Bankruptcy Estate.” Imagine for a second you have a great big bag. The minute you file bankruptcy, everything you own goes into that bag. Your cars, your house, your clothes, bank accounts, everything you own or have a right to own at the second you file bankruptcy in Las Vegas. The law says you get to take certain things out of the bag and keep them even though you’ve filed bankruptcy by using what are called “exemptions.” These are special laws that say you get to keep certain specific property up to a set amount in value. You may also be able to take things out of the bag because they have no value to anyone else, like a home or car that has no equity. Whatever is left in the bag after all exemptions are taken is called “the bankruptcy estate”.
The Trustee is the person in charge of whatever stays in that bag. The Trustee also has the duty to see if there is anything the law allows him to reclaim and put in the bag. For example, if you repaid a loan to a friend or to a relative in the year before you filed, the trustee is responsible for going and getting that money back. What ever is left in the bag, or “the bankruptcy estate” the trustee distributes to creditors. Generally distributions are made in proportion to the amount of debt that is owed. The Trustee also takes a generous commission for his/her time and trouble. In most cases, there is nothing left in the bag, your trustee files the papers that he’s required to, and the case is closed as “no-asset” meaning the trustee says there is nothing to take.
The important things to remember about the trustee is:
1) Your trustee is not a judge. Trustee’s are not a neutral party. Their job is to get everything out of you that the law entitles them to. While most trustees are calm and professional in their demeanor towards you, it’s important to remember that they are your opposition and they are duty bound to take your stuff to the extent that the law allows them to.
2) Your Trustee is not a government employee. Trustee’s are private citizens. They are appointed by the Department of Justice but they aren’t part of the government.
3) While not a judge, they are in charge of the hearing, and they do have certain basic information they need from you to determine if there are any assets which need to be administered. When they ask you a question, give them a direct answer.
4) The trustee wants to spend as little time with you as possible. Because your trustee is commission based, they only make money off of you if you have assets. Most of the time your trustee wants to ask you exactly enough questions to determine if there is anything to sell, and if there isn’t they want you to leave as quickly as possible so they can move on to someone who will make them money. Keep your answers short and sweet. If there is an asset the trustee wants to discuss with you, be direct and honest. Help them do their job so that they can conclude your case and you can move on to your fresh start.
And don’t ever refer to the Trustee as a judge. Ever. It makes your attorney very upset and he may say unkind things to you if he catches you doing it.