COMMENTARY ON DUTIES OF THE
STANDING CHAPTER 13 TRUSTEE
It is a luxury to be
- Ralph Waldo Emerson
- General Comments About
- "... First and
foremost, bankruptcy trustees are fiduciaries
[emphasis added]. They are not servants. They are not
agents. They are not employees of the U.S. trustee, any
particular creditor or group of creditors, the courts,
or the United States of America, including any of its
departments, agencies, or instrumentalities. . . . As
fiduciaries, their loyalty and duty is to the bankruptcy
estate and its beneficiaries..."
- Moreover, pursuant to 11
U.S.C. § 323(a), the trustee is the representative of
- The role of a trustee
differs under the different chapters of the Bankruptcy
- As a creature of statute,
the trustee in bankruptcy only has those powers
conferred upon it by such a statute.
- General Comments About
Chapter 13 Trustees
- Although the Bankruptcy
Code delineates a chapter 13 trustee's duties, the
role of a chapter 13 trustee differs from jurisdiction
to jurisdiction. There is much variation in how chapter
13 trustees satisfies the statutory responsibilities
based upon the expectation of their judges, United
States trustees, Clerks of the Bankruptcy Courts, and
local bar associations.
- "The [chapter 13]
trustee's role is one of much ambivalence. The trustee
in a chapter 13 case works with everyone and for no one.
The trustee has many rights and powers that can be
exercised for or against the interests of the debtor or
- If the number of chapter
13 cases in a particular region so warrant, the United
States trustee, subject to the approval of the Attorney
General of the United States, appoints an individual to
serve as standing trustee.
- Appointed, never
elected. In Re Alpine Lumber and Nursery, 13 B.R.
977 (Bankr. S.D. Cal. 1981) Chapter 13 trustee is
appointed "as a matter of course."
- Shall serve in all
cases in the district. In Re Saberman, 3 B.R. 316 (Bankr.
N.D. Ill. 1980)
- The term 'interim
trustee" does not apply to chapter 13 trustee.
The language is delineated in the chapter 7
- It is the policy of the
United States Trustee program that the total number of
pending cases to be administered by any one standing
trustee should not usually exceed 9,000.
- Individuals serving as
standing chapter 13 trustees have been subjected to full
scale security, FBI, and tax compliance investigations
before their initial appointment and at 5 year intervals
- Chapter 13 trustee
expenses are not paid out of public funds or court fees
nor filing fees. The compensation comes from the estates
they administer, not from tax revenues.
- The duties of a chapter 13
trustee are outlined in 11 U.S.C. § 1302.
- While there is no specific
requirement in 11 U.S.C. § 1302 that a standing chapter
13 trustee be disinterested, the trustee clearly cannot
have an interest adverse to the estate.
- "The role of the
chapter 13 trustee is unique. The trustee does not take
into his or her possession or control property of the
estate. The trustee does not operate the debtor's
business. Rather, the trustee receives payments from the
debtor, and disburses those payments to the debtor's
creditors pursuant to the debtor's plan. The chapter
13 trustee does, however, counsel with and advise the
chapter 13 debtor on all matters relating to the plan
other than legal matters. In short, the chapter 13
trustee is an amalgam of social worker and disbursing
- Statutory Basis of
Chapter 13 Trustee Duties: 11 U.S.C. § 1302 &
- The Chapter 13 Trustee
performs certain duties imposed upon other standing
trustees under other sections of the Bankruptcy Code -
11 U.S.C. § 1302(b)(1) - including to:
- Be accountable for all
property received; 11 U.S.C. § 704(2)
- Ensure that the debtor
shall perform his or her intention as specified in
11 U.S.C. § 521(2)(B) [this is the section that
requires the debtor to perform his or her intention
regarding property within 45 days after the filing
of a notice of intent or within such additional time
as the Court, for cause, fixes] 11 U.S. C. § 704(3)
- Investigate the
financial affairs of the debtor; 11 U.S.C. § 704(4)
- If a purpose would be
served, examine proofs of claims and object to the
allowance of any claim that is improper; 11 U.S.C.
- If advisable, oppose
the discharge of the debtor; 11 U.S.C. § 704(6)
- In Re Dunn, 83 B.R.
694 (Bankr. D. Neb. 1988). Although 11 U.S.C. §
1302 incorporates § 704(6) and requires that the
trustee, if advisable, oppose the discharge of the
debtor, the trustee lacks standing to oppose the
dischargeability of a specific claim.
- Unless the Court orders
otherwise, furnish such information concerning the
estate and the estate's administration as is
requested by a party in interest; 11 U.S.C. § 704(9)
- The trustee shall appear
and be heard at any hearing that concerns -
- The value of property
subject to a lien; 11 U.S.C. § 1302(b)(2)(A)
- Confirmation of a
plan; 11 U.S.C. § 1302(b)(2)(B)
- Modification of the
plan after confirmation; 11 U.S.C. § 1302(b)(2)(C)
- The trustee shall dispose
of, under regulations issued by the Director of the
Administrative Office of the U.S. Courts, moneys
received or to be received in a case under Chapter XIII
of the Bankruptcy Act; 11 U.S.C . § 1302(b)(3)
- The trustee shall advise,
other than on legal matters, and assist the debtor in
performance under the plan; 11 U.S.C. § 1302(b)(4)
- Trustee is prohibited
from giving legal advice, and this section cannot be
used as an argument that the chapter 13 trustee can be
used as a substitute for effective debtor counsel.
- In some jurisdictions,
the standing trustee provides extensive counseling and
education to all chapter 13 debtors in the form of
seminars or videotapes that the debtors may be
required to attend.
- The trustee shall ensure
that the debtor commences making timely payments under
section 1326 of this Title; 11 U.S.C. § 1302(b)(5)
- If the debtor is engaged
in business, then in addition to the previously
described duties, 11 U.S.C. § 1302(c) provides that the
Chapter 13 Trustee shall also have the duties in ...
- 11 U.S.C. § 1106(a)(3)
[Duties of Trustee and Examiner]: except to the extent
that the Court orders otherwise, investigate the acts,
conduct, assets, liabilities, and financial condition
of the debtor, the operation of the debtor's
business, and the desirability of the continuance of
such business, and any other matter relevant to the
cases or to the formulation of a plan;
- 11 U.S.C. § 1106(a)(4) as
soon as practicable -
- File a statement of
any investigation conducted under paragraph (3) of
this subsection, including any fact ascertained
pertaining to a fraud, dishonesty, incompetence,
misconduct, mismanagement, or irregularity in the
management of the affairs of the debtor, or to a
cause of action available to the estate; and
- Transmit a copy or a
summary of any such statement to any creditors'
committee or equity security holders' committee,
to any indenture trustee, and to such other entity
as the Court designates.
Notice: This web site is provided with the understanding that the Chapter 13 Trustee Office is not engaged in rendering legal, accounting, or other professional services. If legal advice or other expert assistance is required, the services of a competent person should be sought.