When an individual files a Chapter 13 petition in New York, a trustee is appointed by the court to administer the bankruptcy case. With electronic filing of bankruptcy petitions under the federal court system, the debtor usually hears who is the trustee as quickly as the day the petition gets filed.
Depending on the jurisdiction, the Chapter 13 trustee may be a government employee, part of the US Department of Justice, or a private self-employed individual who provides trustee services as a small business. If a private individual, the trustee may have his own staff of accountants, appraisers, and attorneys.
At a 341 hearing, the debtor may see the trustee as no nonsense, asking questions over several times until a debtor answers specifically, recommending cases for dismissal, or telling counsel not to disturb his staff while he is questioning.
One reason for why a trustee may be short or seem rude is because the trustee may not be paid a salary or anything when a bankruptcy estate does not have enough assets for his fees. The trustee has many cases to work on and does not want to waste time. He tries to be efficient by evaluating cases to prioritize on the estates that have assets, or follow bankruptcy procedures.
To become a trustee, qualified candidates often send a resume to a senior level trustee. The candidates often go through an interview and get fingerprinted. Most qualified candidates have a college degree and at least 5 years of experience in law, accounting, tax, or credit counseling. Not all trustees are attorneys. The trustee may work many hours and not get paid anything at all if the bankruptcy estate does not have any assets or gets dismissed or converted to another bankruptcy chapter.
The trustee undergoes a criminal background check. To prepare for a future career as a trustee, an individual needs to control anger, and not get into any criminal conduct like shoplifting. Even taking a cup or container from a grocery can get people into trouble these days when few things are free. The court wants to make sure the trustee does not misappropriate from the bankruptcy estate when managing the bankruptcy estate on behalf of the creditors.
The trustee needs to have a good credit record and not filed bankruptcy in the past 7 years. To get a high credit score, a person should use few credit cards and keep them long term. The trustee is bonded. The trustee puts up a particular amount of money, and if there is a violation of the trustee obligations, the trustee loses the bond. Often, during the first year as trustee, the individual pays for the bond. After the first year, the bond funds may come from the bankruptcy estates the trustee works on.
When contemplating bankruptcy, engage a New York bankruptcy attorney familiar with trustee qualifications.