Bankruptcy Overview
1. The Debtor
The debtor is the person or entity who files a bankruptcy petition or against whom an involuntary petition is filed, Section 101(13). When a husband and wife file together. They are known as joint debtors.
2. The Creditors
The creditors are the persons or entities to whom the debtor owes a debt, Section 101(10). Creditors are said to have a claim
2.1 Secured Creditors
Secured creditors are those who have collateral they may seize if the debtor does not pay the debt.
2.2 Priority Creditors
Priority creditors are unsecured creditors whose claims are paid before other unsecured creditors. Section 507. There are nine levels of priority creditors the most common being administrative expenses, certain wages and most taxes.
3. The Trustee
3.1 Chapter 7 Trustee
The chapter 7 trustee is a private individual, often a bankruptcy attorney, who is chosen by the Office of the United States Trustee's Office to administer the chapter 7 estate. His or her job is to maximize the assets of the estate and investigate the financial affairs of the debtor. Section 704. He sells the assets, if there are any to be sold, and distributes the funds to the creditors. In the Central District of California, the U.S. Trustee's Office maintains a panel of approximately 30 trustees. The trustees in each particular case are chosen at random from this panel.
3.2 Chapter 13 Trustee
The chapter 13 trustee is an individual chosen by the U.S. Trustee to administer the chapter 13 estate. The chapter 13 trustee is usually a standing trustee meaning that the job is full time and permanent. The chapter 13 trustee's job is to investigate the financial affairs of the debtor, comment on the proposed chapter 13 plan, and process the monthly plan payments made by the debtor during the period the plan is in effect, usually either three years or five years. In the Central District of California there are five chapter 13 trustees.
3.3 Chapter 11 Trustee
The chapter 11 trustee is, at the outset of the chapter 11 case, the debtor himself (or itself). The debtor is known as the Debtor-in-Possession. Creditors may, however, ask the court to appoint an independent trustee during the case. If the court grants the request, the trustee is chosen from the same panel as the chapter 7 trustees.
4. The Office of the United States Trustee
d States Trustee in the Central District of California is Peter Anderson. The OUST was formed to help the administration of the bankruptcy system. They appoint the various trustees, oversee the administration of cases, investigate fraud, and generally support the bankruptcy judges' activities. The OUST in the Central District of California has approximately 20 attorneys on staff and about 60 employees in total. The U.S. Trustee has an excellent web site at www.usdoj.gov/ust.
5. The Judge
Bankruptcy Judges are federal judges appointed for a 14 year term. There are 21 judges in the Central District of California. Each bankruptcy case is assigned to a judge when the case is filed.
6. The Court
The Bankruptcy Court is a Federal Court. This is so because the United States Constitution provides that the federal government has the power to enact bankruptcy laws. All of the courts today have excellent web sites. The Central District of California site can be found at www.cacb.uscourts.gov.