Maryland Bankruptcy Law and the Bankruptcy Trustee’s Duties

Maryland bankruptcy law is designed to provide relief to individuals and businesses facing financial hardships. When someone files for bankruptcy under Maryland law, a bankruptcy trustee plays a crucial role in overseeing the process. Understanding the duties of the bankruptcy trustee is essential for anyone considering filing for bankruptcy in Maryland.

In Maryland, there are primarily two types of bankruptcy individuals may file for: Chapter 7 and Chapter 13. Chapter 7, often referred to as liquidation bankruptcy, allows individuals to discharge most debts after the liquidation of non-exempt assets. Chapter 13, on the other hand, involves a repayment plan where individuals pay off their debts over three to five years while retaining their assets.

The bankruptcy trustee appointed to each case has several key responsibilities, which include:

1. Reviewing the Bankruptcy Petition

The trustee is responsible for thoroughly reviewing the bankruptcy petition and schedules filed by the debtor. They verify the accuracy and completeness of the information disclosed, ensuring that all assets, debts, and financial affairs are properly detailed. This step is vital for maintaining the integrity of the bankruptcy process.

2. Conducting the Meeting of Creditors

After filing for bankruptcy, the trustee organizes and conducts a meeting of creditors, also known as a 341 meeting. During this meeting, the debtor is required to answer questions about their financial situation and assets. Creditors may also attend and ask questions about the debtor’s financial affairs.

3. Managing the Debtor's Assets

In Chapter 7 cases, the trustee is responsible for liquidating non-exempt assets to pay creditors. They assess the value of the debtor's assets and determine which items can be sold. Maryland law provides specific exemptions that allow debtors to retain necessary assets such as a vehicle, a home, and personal belongings up to a certain value.

4. Distributing Funds to Creditors

Once the trustee sells the non-exempt assets, they distribute the funds collected to creditors based on the priority of their claims. In Chapter 13 cases, the trustee oversees the repayment plan, ensuring that the debtor adheres to the agreed-upon payment schedule and distributing payments to creditors accordingly.

5. Ensuring Compliance with Bankruptcy Law

The trustee also ensures that the bankruptcy filing complies with applicable laws and regulations. They have the authority to raise objections if they identify fraudulent activities or discrepancies in the debtor’s disclosures. Protecting the rights of creditors while facilitating a fresh start for debtors is a critical aspect of the trustee's role.

6. Closing the Bankruptcy Case

Once all administrative tasks, such as asset liquidations or disbursements, have been completed, the trustee is responsible for closing the bankruptcy case. They file a final report with the bankruptcy court, documenting the entire process and confirming that all debts that can be discharged have been taken care of.

Understanding the duties of the bankruptcy trustee under Maryland law can help individuals navigate the complex bankruptcy process. It is recommended for anyone considering filing for bankruptcy to consult with a qualified bankruptcy attorney who can provide guidance tailored to their specific situation. With proper legal support, navigating Maryland bankruptcy law can lead to a fresh financial start.