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Simple English definitions for legal terms
trustee in bankruptcy
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A quick definition of trustee in bankruptcy:
A trustee in bankruptcy is a person who is responsible for managing the assets and debts of someone who has filed for bankruptcy. They make sure that the person's creditors are paid as much as possible and that the person's assets are distributed fairly. Think of them like a referee in a game, making sure everyone plays by the rules and gets what they're owed.
A more thorough explanation:
Trustee in Bankruptcy
A trustee in bankruptcy is a person appointed by a court to manage the assets and debts of a bankrupt individual or business. The trustee is responsible for selling the assets of the bankrupt entity and distributing the proceeds to creditors according to the priority of their claims.
When a person or business files for bankruptcy, a trustee is appointed to oversee the process. For example, if a business goes bankrupt, the trustee may sell off its assets, such as equipment or inventory, to pay off creditors. The trustee may also investigate the financial affairs of the bankrupt entity to determine if any fraudulent activity occurred.
Another example is if an individual files for bankruptcy, the trustee may sell off their non-exempt assets, such as a second home or luxury car, to pay off creditors. The trustee may also work with the individual to create a repayment plan for their debts.
A trustee in bankruptcy is a court-appointed person who manages the assets and debts of a bankrupt entity. They are responsible for selling off assets and distributing the proceeds to creditors. The examples illustrate how a trustee may sell off assets to pay off creditors and investigate financial affairs to ensure no fraudulent activity occurred. The trustee may also work with individuals to create a repayment plan for their debts.