United States Trustees appoint and supervise private trustees who administer consumer bankruptcy estates under chapters 7, 12, and 13 of the Bankruptcy Code. Private trustees are not government employees. They do, however, work in concert with the United States Trustee to ensure the efficiency and integrity of the bankruptcy system.
Chapter 7 trustees are often referred to as “panel trustees” because they are appointed by the United States Trustee to a panel in each judicial district. Once trustees are appointed to the panel, chapter 7 cases generally are assigned through a blind rotation process. The chapter 7 trustee collects assets of the debtor that are not exempt under the Bankruptcy Code, liquidates the assets, and distributes the proceeds to creditors.
Chapter 12 and chapter 13 trustees are called “standing trustees” because, pursuant to statute, they have a standing appointment from the United States Trustee to administer chapter 12 and chapter 13 cases within a particular geographic area. Standing trustees evaluate the financial affairs of the debtor, make recommendations to the court regarding confirmation of the debtor’s repayment plan, and administer the court-approved plan by collecting payments from the debtor and disbursing the funds to creditors.