Chapter 7 Bankruptcy Case – In a chapter 7 bankruptcy case, all of the debtor’s property belongs to the bankruptcy estate unless the court makes a ruling that certain property is no longer property of the estate, the trustee abandons property to the debtor, or the property is exempt under California law from collection by creditors. It is recommended to consult a bankruptcy attorney to determine what property is exempt. A trustee is appointed to take control of certain assets of the debtor, bring these assets into the estate, and sell or distribute these assets for the benefit of creditors. Some assets will remain with the debtor if these assets are determined to be exempt from distribution to creditors. A trustee can recover certain assets that were previously transferred and bring those assets into the bankruptcy estate. Neither a debtor nor any other person or business should use or transfer an asset that belongs to the bankruptcy estate unless there is an express court order or notice from the trustee.
Chapter 11 Bankruptcy Case – If a trustee is appointed in a chapter 11 bankruptcy case, a trustee will manage the affairs of the debtor and make all decisions about property of the estate. In that scenario the trustee will perform many of the same roles as a trustee in a chapter 7 case, except different deadlines and procedures apply. The trustee has the right to propose a plan of reorganization.
Chapter 13 Bankruptcy Case – In a chapter 13 bankruptcy case, all property remains property of the debtor unless the court orders otherwise. A trustee is appointed to collect payments, monitor activity in the case and to report to the court on how well a debtor is meeting its obligations. If a debtor is not meeting obligations, the trustee can ask the court to dismiss the bankruptcy case. If a debtor’s income rises, the trustee or a creditor can ask the court to increase amounts paid to creditors.