Difference between the U.S. Trustee and a Bankruptcy Trustee?

If you are contemplating bankruptcy, you may hear or see references to the U.S. Trustee or a bankruptcy trustee, and wonder what the difference may be. The short answer is that the U.S. Trustee is the bankruptcy trustee, although in some cases the U.S. Trustee may appoint private individuals to serve as the bankruptcy trustee in a particular case.

The United States Trustee Program is a component of the Department of Justice, tasked with overseeing the administration of bankruptcy cases and private trustees under 28 U.S.C. § 586 and 11 U.S.C. § 101, et seq. (the Bankruptcy Code). There are a total of 21 U.S. Trustee offices throughout the country (28 U.S.C. § 581), with a U.S. trustee appointed to oversee each office. Each U.S. Trustee, of course, employs staff, including attorneys, to help in carrying out the Trustee’s duties (28 U.S.C. § 589).

The U.S. Trustee’s involvement in the bankruptcy cases varies by the type of the case. In Chapter 7 bankruptcy cases, the U.S. Trustee appoints private individuals (usually attorneys) to oversee the cases (28 U.S.C. § 586(a)(1)), and performs primarily a supervisory role, making sure that the private Chapter 7 trustees properly perform their duties.

In Chapter 13 bankruptcy cases, the U.S. Trustee will usually appoint a standing Chapter 13 trustee to oversee the Chapter 13 cases (28 U.S.C. § 586(b)), and again performs a supervisory function.

The U.S. Trustee’s most direct involvement is in Chapter 11 cases, in which the Trustee or her staff directly perform the duties specified in § 586, which include conducting the meeting of creditors (also known as the §341 meeting), appointing creditors’ committees, reviewing applications for compensation of professionals, monitoring plans and disclosure statements, and collecting the quarterly fees prescribed by 28 U.S.C. § 1930(a)(6). In the rare Chapter 11 cases in which the debtor is not allowed to continue managing its own affairs, the U.S. Trustee may also appoint a private trustee to manage the debtor’s affairs.

One of the more significant duties of the U.S. Trustee is the duty to investigate abuses and violations of the bankruptcy process, and, where appropriate, to object to the debtor’s discharge or seek dismissal of the cases (see, e.g., 28 U.S.C. § 586, 11 U.S.C. §§ 727, 1112).

In sum, while the U.S. Trustee plays a very important role in the bankruptcy process, most debtors in Chapter 7 and Chapter 13 cases will not have any direct dealings with the U.S. Trustee. Those filing for Chapter 11 bankruptcy, however, can expect to have interactions with the U.S. Trustee’s office throughout the process.