You choose the trustee you want to work with but who do they work for? You? Your creditors?
Depending on what you read on the internet or who you talk to, this can cause quite a debate.
In very few words, the trustee in bankruptcy is an officer of the court. That means they are responsible for administering the Bankruptcy and Insolvency Act.
They sit between the creditors and the person who is doing the bankruptcy or proposal and in essence “conduct the traffic”.
A Bankruptcy Trustee Acts For All Parties
They are to realize on the assets of a bankrupt, help a debtor plan a viable proposal, recover monies for the creditors and assist the bankrupt in obtaining their discharge.
This all means they might look like they are in a position of conflict – they help the debtor and the creditors. At times they will even look like they are against the bankrupt or debtor by making them go to court. The truth however is that there is a strong rulebook they must follow – The Bankruptcy and Insolvency Act.
A trustee in bankruptcy is responsible for ensuring that if you file a bankruptcy or do a proposal, you are aware of your duties – you must be told what you are required to do to enable completion of the bankruptcy or proposal.
But they must also recover on your assets if you are bankrupt or ensure payments are made within the terms of the payment plan outlined if you are doing a proposal.
If you do not complete the duties, they are required by law to report to the Official Receiver (the government officials who oversee the bankruptcy and proposal processes) and the bankruptcy court on what is still outstanding. This is where the conflict comes in.
If you are experiencing financial difficulties, you cannot “hire” a trustee to work for you. You need to see a trustee in bankruptcy to assess your situation and to sign the proper documents. Then the trustee is required to file the documents with the Office of the Superintendent of Bankruptcy (“OSB”) and the OSB appoints the trustee to administer the file. If that sounds complicated, it is the reason why a trustee in bankruptcy is required to study many hours and write many examinations before being granted a licence.
Trustees in bankruptcy do not work for you but they assist you. They do not work for the creditors but they do assist in assuring that there is proper recovery for the creditors.
If you are having financial difficulties, talk to a trustee in bankruptcy. As officers of the court, we are required to conduct ourselves within certain standards of practise and thus they we work to ensure that your creditors and you are dealt with fairly and equitably.