Since most of the bankruptcy cases filed in the U.S. consist of individual consumers, a bankruptcy administrator is very much needed to make sure that the bankruptcy case is monitored well and that both parties involved in the case – creditors and debtors – have their actions associated and monitored.
The principal roles of the bankruptcy administrator
In the U.S., only two states make use of bankruptcy administrators, Alabama and North Carolina. The rest of the remaining 48 states appoint a bankruptcy trustee to handle all transaction between creditors and debtors. The Bankruptcy Administrator Program was first established by the Congress in 1986. Under the program, the bankruptcy administrator has five major responsibilities:
- Oversee the administration of the bankruptcy case’s;
- Maintain a panel of private trustees;
- Monitor the transactions and conduct of parties involved in bankruptcy;
- Approve and maintain a list of their districts approved debtor education providers and credit counseling agencies;
- Issue the schedules of administrative expenses.
Because bankruptcy administrators are under the authority of the Administrative Office of the United States Court which is part of the judicial branch, the latter court appoints the bankruptcy administrators to perform their duties.
Administrative duties of a bankruptcy administrator
Bankruptcy administrators represents creditors instead of debtors in a bankruptcy which is why they have to ensure that a debtor is indeed legitimate to file a bankruptcy case and is not just failing outside their limit of acceptable income. To verify a debtor’s financial state and bankruptcy eligibility, the bankruptcy administrator has the right to ask for additional documentation like tax reports, business records, and profit and loss statements. One of their most important duties is to ensure that all policy procedures are followed to the letter and that every paperwork transaction like filing, photocopying, and organizing between the creditors and debtors should fall under his jurisdiction.
Other duties and responsibilities
In the case of filing for a Chapter 7 bankruptcy, it is the duty of bankruptcy administrators to appoint and maintain a panel of private trustees who will serve as bankruptcy trustees. Under this bankruptcy chapter, it is the administrator who appoints a bankruptcy trustee to further investigate the debtor’s current financial state and just supervises the implementation of this process.
On the other hand, a bankruptcy trustee is appointed by the administrator in Chapter 13 Bankruptcy cases to oversee the completion of the repayment plan and just supervises this process just like in Chapter 7.
The bankruptcy administrators are also given the duty to ensure that a debtor completes a credit counseling course through a credit counseling agency or a debtor education provider that is approved by the bankruptcy administrator within their district of jurisdiction.
Limitations of bankruptcy administrators
Since bankruptcy administrators are just overseers of the bankruptcy case to ensure that all plans and process comply with the law, they are not permitted nor are they qualified to provide legal counsel or advice to any party involve in the actual bankruptcy procedure. Instead, they have the authority to monitor a bankruptcy trustee’s performance of their duties and also raise issues regarding the bankruptcy law before the bankruptcy court in behalf of the public.