Bankruptcy collectors work for the bankruptcy trustee. In Chapter 7 bankruptcies, they take assets on the trustee’s behalf.
For example, if you’re giving up your home in a Chapter 7, a bankruptcy collector takes the property and has it appraised, then sells it and makes sure it’s sold for a fair value.
So essentially the collector works as an assistant to the trustee, who is usually in court and stays very busy. With thousands of cases to handle at a time, a trustee typically doesn’t have the time or skill to appraise the value of houses, cars, and other assets, then make sure a sale goes through correctly or sells well at auction.
After these sales go through, the bankruptcy collector gives the money made to the trustee. Then the trustee hands out that money to creditors and takes out a trustee fee as well.
There are a couple of things to remember about bankruptcy collectors:
1) They are neutral. Bankruptcy collectors aren’t their to hurt you or take advantage of you. They’re just there to assist the trustee, who is also neutral.
2) Bankruptcy collectors are much less common in Chapter 13 bankruptcies. It’s rare for people to lose property or valuable assets in Chapter 13, since the whole point is to keep your assets.
3) You may not have to lose your assets at all. In over 30 years of bankruptcy filings in Memphis, I’ve never had a client lose an asset they wanted to keep. I’m very proud of that record. If you need to save your home or car, call me at 901-327-2100. The conversation is free, and you may be surprised at your options.