10 Pieces of Bankruptcy Information Everyone Should Know

You'll See a Trustee, Not a Judge
Debra Miller, standing Chapter 13 bankruptcytrustee for the northern district of Indiana, testifies during a hearing on Capitol Hill in 2008. Alex Wong/Getty Images

In the United States, bankruptcy filings are handled by federal bankruptcy courts. There are 90 such courts corresponding to 90 different bankruptcy districts across the country [source: U.S. Courts]. Although bankruptcy cases are overseen by a federal court, few debtors ever see the inside of a courtroom, and even fewer interact with an actual bankruptcy judge. Your main government contact throughout a bankruptcy case is someone called a trustee.

The trustee is appointed by the court to manage all aspects of the bankruptcy case and assure that all parties — debtors and creditors alike — get a fair shake. In reality, the trustee doesn't represent either the debtor or the creditor, but the bankruptcy estate [source: Dzikowski]. In a Chapter 7 case, for example, all of your nonexempt assets become part of the estate. It's the trustee's job to assess the value of the assets, sell them and distribute the cash to creditors.

Federal bankruptcy trustees aren't lawyers. They're a combination of administrative officers and investigators. Technically, trustees are part of the U.S. Department of Justice. One of their roles is to make sure that debtors and creditors aren't trying to defraud the system.

Next we'll unravel the mystery about different kinds of bankruptcies.