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58 Feature By: Brad Geisen According to the U.S. Courts website, the fundamental goal of the Federal bankruptcy laws enacted by Congress is to give debtors a financial "fresh start" from burdensome debts and provides for "liquidation" in a Chapter 7 filing—the sale of a debtor's property and the distribution of the proceeds to creditors. THE QUESTION IS, DOES IT? Bankruptcy was created to give individuals a legal vehicle to settle debts or negotiate manageable terms. In general, trustees do a great job working with debtors to resolve the vast majority of their debt. However, when real estate is involved, the options outlined in the federal bankruptcy laws are rarely followed, creating greater burden, hampering, or making it impossible for debtors to truly receive a "fresh start." Bankruptcy law is well defined and offers several solid solutions for both the debtors and creditors, but in most cases, these options are never allowed. It seems hard to believe, but if you dive into the process and the structure of how cases are administered, both the law and the intent of the law take a back seat to reality. In Chapter 7 bankruptcy, a trustee is appointed to administer the case. e primary role of the U.S. Trustee Program is to serve as the "watchdog over the bankruptcy process." As stated in the Mission Statement: e mission of the United States Trustee Program is to promote the integrity and efficiency of the bankruptcy system for the benefit of all stakeholders—debtors, creditors, and the public. For this service, the trustee receives a fee for administering the estate and a percentage of any assets sold. Although the Trustee must be fair to the debtor, their interests aren't always aligned. e Trustee Handbook states: "e Chapter 7 Trustee is the representative of the estate. 11 U.S.C. § 323(a). e Trustee is a fiduciary charged with protecting the interests of all estate beneficiaries—namely, all classes of creditors, including those holding secured, administrative, priority, and non-priority unsecured claims, as well as the debtor's interest in exemptions and any possible surplus property." e statement seems pretty straightforward and relatively simple, but where does everything go wrong? 58 IS CHAPTER 7 BANKRUPTCY BROKEN? Does the current process deny debtors and creditors their rights?