What is a bankruptcy trustee?

What is a bankruptcy trustee?

On Behalf of | Apr 20, 2022 | Bankruptcy |

For people in Maryland who are going through bankruptcy, or whose business is going through bankruptcy, a bankruptcy trustee is a key person in the process. The trustee oversees the process and distributes the assets to creditors.

Bankruptcy

A bankruptcy is a way for a person or a company to manage debts when it has taken on too much debt to afford. The entity that is going through bankruptcy officially declares that they can no longer make their payments. During bankruptcy, the court helps the company or person go through the process of selling off what they own and distributing it among the banks or other creditors that they have. The court looks at the timing and nature of the loans and debt to determine how much each creditor should get.

In bankruptcy the court appoints a person known as the trustee. The job of the trustee is to document and identify all relevant assets and direct the flow of assets to creditors. They usually have experience with law and accounting, and they are entitled to a fee based on the value of the assets. The trustee is in charge of making sure that the bankruptcy proceeds correctly and that the assets are found and distributed according to the laws and contracts involved. This can vary based on whether it is a corporate or private bankruptcy, the number of creditors, the types of debt, and other factors.

The trustee is an important role and the person in charge will have a major impact on the outcome of the bankruptcy proceedings as well as on how long those proceedings will take.