There are several roles in bankruptcy proceedings that may change slightly depending upon the type of bankruptcy relief sought – whether it is Chapter 7, 11, 12 or 13 – but the major players are almost always the same. We’ve listed a few of them below.
Debtor: A debtor can be an individual, a business/corporation, or even a municipality (such as a city or county). The debtor borrowed money or incurred an obligation which is owed (or alleged to be owed) to creditors.
Creditor: An entity to which a debt or obligation is owed (or alleged to be owed). There are two types of creditors: (1) a secured creditor, to which collateral or property was pledged (such as a mortgage on a house or a car loan); and (2) an unsecured creditor, to which a loan or obligation was given and no collateral was offered (such as a credit card or medical bill).
Trustee: An individual appointed by, in North Carolina, the Bankruptcy Administrator’s Office to: (1) gather property not exempt from bankruptcy, (2) manage the funds from the sale of that property, (3) pay certain administrative expenses, and (4) distribute the remaining balance to the creditors. The Trustee receives non-exempt property from either the liquidation of assets, or monthly payments from the debtor’s post-petition earnings, depending upon the type of bankruptcy filed.
Bankruptcy Administrator: An individual appointed to oversee the administration of all bankruptcy cases that are filed. North Carolina uses Bankruptcy Administrators, while most other states use United States Trustees, although their roles and responsibilities are nearly identical. The Bankruptcy Administrator ensures that the bankruptcy system is running smoothly and efficiently.
Equity Holders: In corporate bankruptcy cases, equity holders are often the stockholders, otherwise known as equity security holders.
Bankruptcy Judge: the individual who presides over the case and resolves disputes.
While these are not the only players you should expect to be involved in bankruptcy proceedings, they are involved in the majority of cases.