The Role of the Chapter 13 Bankruptcy Trustee in Colorado

March 2, 2011

By: David M. Serafin

Once a chapter 13 bankruptcy case is filed in Colorado, a 341 Meeting of Creditors is scheduled for about 4-5 weeks later. The chapter 13 trustee is appointed by the bankruptcy court to review your entire financial situation and to represent the best interests of the unsecured creditors who file claims with the court.

I always advise my clients that the chapter 13 trustee is the equivalent of opposing counsel in your bankruptcy case. The trustee does not have the powers of a judge but is entitled to object to a proposed monthly chapter 13 repayment plan on the grounds that such plan should be paying more to unsecured creditors. The trustee may also attempt to convince the court to require that an amended plan be filed (sometimes an amended plan is required to be filed multiple times due to ongoing disagreement with the trustee over a bankruptcy debtor’s disposable income). In anticipation of the 341 hearing, I simply advise my clients to answer all questions truthfully but without volunteering information.

In Colorado, it should also be noted that because the trustee is entitled of 10% of all chapter 13 monthly plan payments, the Bankruptcy Code provides the trustee with a statutory incentive to object to most plans in order to determine whether unsecured creditors should be paid more. Conversely, our job is to provide maximum debt relief by ensuring that you’re paying as little as possible of your disposable income to these same creditors.