Trustee in Bankruptcy Law and Legal Definition

A Trustee in Bankruptcy is a person appointed by the United States Department of Justice or by the creditors involved in a bankruptcy case. Under Chapter 7 of the Bankruptcy Code, the trustee duties are gathering the debtor’s non-exempt property, managing the funds from the sale of those assets, paying expenses and distributing the balance to the owed creditors.

The trustee is responsible for receiving the debtor’s monthly payments and proportionally distributing those funds to the bankrupt’s creditors. The Bankruptcy Trustee acts on behalf of the debtor to guarantee that both the creditors’ and the debtor’s interests are maintained in accordance with the bankruptcy laws. The trustee in bankruptcy is often required to act as a negotiator between the two parties.