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How to Become a Bankruptcy Trustee

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The office of the United States Trustee, which is part of the Department of Justice, supervises bankruptcy cases but does not assign staff members as trustees. Instead, it appoints private trustees to handle the collection and disbursement of funds in bankruptcies. The private trustee is a neutral party who protects the debtor and his creditors. Trustees receive a set fee for handling each case, but in more complex types of bankruptcy, they also may receive a percentage of the funds that they disburse to creditors and attorneys.

Qualifications and Experience

The Department of Justice seeks trustee candidates with well-established financial, administrative and interpersonal skills. Previous experience working with bankruptcy cases is helpful, but not mandatory, and you may only serve in the district where you reside. To be considered, you must pass a background check, which includes a fingerprint check, a review of your credit history and IRS verification that your tax payments are in good standing. In addition, you must qualify to be bonded. A bond is specialized insurance against the possibility that you will embezzle the funds that you handle. Bonding companies are unlikely to grant coverage unless you have a solid credit report and a clean criminal history.

Appointment Structure

The job of reviewing candidates and appointing bankruptcy trustees is handled by 21 U.S. Trustee regional offices. For Chapter 7 bankruptcy cases, each district office appoints a group of private trustees and assigns cases to them on a rotating basis. These are called panel trustees. For Chapter 12 and 13 cases, there is only one trustee for each type of bankruptcy in each district. This person is called the standing trustee.

Specialization in Bankruptcy Type

Because private bankruptcy trustees may only serve for one type of bankruptcy, you must choose a specialization. Chapter 7 bankruptcy completely discharges a person’s debt. Filers usually have very little real property, so the process moves quickly. Chapter 13 is for debtors who have regular income and significant equity in a home they want to keep. This form of bankruptcy does not dismiss the debt, but allows the filer to pay it off over a three- to five-year period. The trustee protects the debtor by handling all contact with and payments to creditors. Chapter 12 bankruptcy allows self-supported farmers or fishermen to repay all or part of their debt over a three- to five-year period. The trustee receives and disburses the payments over this extended period.

The Application Process

Submit your resume to the appropriate district office of the U.S. Trustee, found on the Department of Justice’s website. Vacancies are filled on a periodic basis, so check back if you don’t find an appropriate vacancy the first time you visit the site. Because bankruptcy cases in Alabama and North Carolina do not fall under the jurisdiction of the U.S. Trustee program, if you live in either of these states, you must apply instead to the Bankruptcy Administrator for your district. A list of the administrators for each of these six districts is available on the Bankruptcy Administrator page of the U.S. Courts website.

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About the Author

A retired federal senior executive currently working as a management consultant and communications expert, Mary Bauer has written and edited for senior U.S. government audiences, including the White House, since 1984. She holds a Master of Arts in French from George Mason University and a Bachelor of Arts in English, French and international relations from Aquinas College.