What is a U.S. Trustee?

A U.S. Trustee is a special member of the Department of Justice who protects the integrity of the bankruptcy system by promoting efficiency, fairness, and compliance. U.S. Trustees work with the FBI, U.S. Attorneys and other law enforcement agencies to investigate bankruptcy fraud and prevent system abuse.

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The Person

The U.S. Attorney General appoints a U.S. Trustee and assigns them to one of the 21 jurisdictions in the country for a five-year term. They are responsible for the administration of bankruptcy cases, ensuring compliance with applicable laws and managing a team of trustees who oversee bankruptcy cases. The U.S. Trustee randomly assigns these trustee team members to supervise specific cases. U.S. Trustees don’t have any prosecution powers, so they refer criminal violations to the U.S. Attorney.

The Purpose

The sole purpose of U.S. Trustees is to ensure a smooth working bankruptcy system that benefits debtors, creditors, and the public. A huge part of this responsibility is by ensuring that everyone involved in the process knows and fulfills their legal obligations. Every year, the Attorney General submits an annual report to Congress through the President’s budget. This publicizes the total amounts of deposits and expenditures for Congress to approve.

The History

The U.S. Trustee program was established in 1978 through the Bankruptcy Reform Act. It is financed through the U.S. Trustee System Fund, which collects fees from people and organizations invoking Federal bankruptcy protection. Title 28, Section 589a of the United States Code allows U.S. Trustees to engage in self-funding. Each jurisdictional fund receives deposits from mandatory filing fees, chapter 11 quarterly fees, interest on invested funds and chapter 12 or 13 excess percentage fees.

The Cases

The U.S. Trustees supervise the administration of four types of bankruptcy cases: Chapter 7 liquidation, Chapter 11 reorganization, Chapter 12 family farm reorganization, and Chapter 13 wage-earner reorganization. These cases may involve bankruptcy estates, creditors’ committees, disclosure statements and applications for hiring professionals. Regardless of the case type, the U.S. Trustees must enforce the legal requirements of the Bankruptcy Code and refer cases for investigation and criminal prosecution. This means that they must prepare a variety of judicial motions and pleadings.

The Specializations

U.S. Trustees panels are made up of different legal and financial professionals. Bankruptcy analysts use their economic knowledge and financial analysis skills to review business records, accounting statements, financial reports, and bankruptcy petitions. They must analyze proposed corporate reorganization plans to verify the financial viability. Paralegal specialists assist attorneys, create and draft pleadings and help with processing the cases. Legal data technicians use bankruptcy databases and case management information systems to enter data, schedule meetings and prepare reports.

Other career opportunities within U.S Trustee teams include legal clerks, who type documents and file electronic cases, petitions and updates. Administrative officers are tasked with budget, procurement, and human resources duties. Trial attorneys submit cases to the court, provide legal advice and determine whether legal proceedings are warranted. If so, they argue in court with recommendations for appropriate actions.