What are the duties of a Chapter 7 Panel
Although their obligations are many
and varied, the Chapter 7 Trustees’ primary goal is to liquidate assets for the benefit of creditors where
possible. Chapter 7 Trustees distribute approximately $1.5 billion each year to creditors. In
approximately 90% of the Chapter 7 bankruptcy cases filed, there are no assets available for liquidation, either
because assets are exempt (protected) by debtors or liened by secured creditors. In all cases, Chapter 7
Trustees must investigate the debtor’s affairs, examine the debtor under oath, and submit reports to the bankruptcy
court and Office of the U.S. Trustee.
The Panel Trustee will review the
debtor's petition and schedules after they have been filed with the Court. The Panel Trustee may request
additional information from the debtor to review in conjunction with the debtor's petition and schedules. The
Panel Trustee specifically reviews the debtor's exemption schedules to determine whether the debtor has properly
followed the state or federal exemption laws.
The Panel Trustee formulates questions
to ask the debtor at the Section 341 hearing regarding the debtor's assets, liabilities, income and expenses.
The Panel Trustee serves as the hearing officer for the 341 hearing. Each debtor is sworn and examined by the
Panel Trustee and the creditors are allowed the opportunity to ask questions which is moderated by the Panel
Trustee. After the Section 341 hearing, the Panel Trustee will object to exemptions that have been improperly
The Panel Trustee must file an
objection to the claimed exemptions within 30 days of the Section 341 hearing. The Panel Trustee will seek
turnover of assets held by the debtor or other parties and will arrange for their eventual sale. The Panel
Trustee may also seek to recover assets conveyed by the debtor prior to the filing of the bankruptcy. This
could include payments made by the debtor to its creditors within 90 days of the bankruptcy filing or 1 year if the
payments were made to related parties of the debtor.
The Panel Trustee will cause a notice
to be given to all creditors to file their claims with the Bankruptcy Court. The Panel Trustee will then pay
creditors according to the priority level they have been given by the Trustee. After all funds held by the
Panel Trustee are distributed, the Trustee will seek approval of the Court to close the bankruptcy
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