A bankruptcy trustee sale sounds to be something quite complicated and technical, but in essence it's quite a simple concept and you must first understand what exactly a trustee is. A trustee in bankruptcy is defined as the person appointed by the United States Department of Justice or by the creditors in a bankruptcy case. Because there are two different types of bankruptcy in the United States, there are two different types of trustees.

In a Chapter 7 bankruptcy case, the trustee is responsible for gathering the non-exempt property from the debtor. When this property is sold, the sale is called a bankruptcy trustee sale. The proceeds from a bankruptcy trustee sale is then used to pay back the creditors that the debtor owes. The balance of funds from the bankruptcy trustee sale is then distributed to the creditors that are owed.

In a Chapter 13 bankruptcy case, the trustee is responsible for receiving the monthly payments that the debtor is required to make and then the trustee distributes those funds to the creditors that are owed. The trustee does not hold a bankruptcy trustee sale in this situation.

In a Chapter 13 case, the trustee is required to act on behalf of the debtor to ensure that the creditors are compensated and that the debtor's interests are maintained according to United States bankruptcy laws. The trustee may also be responsible for any negotiations between the creditors and the debtor.

The State of Arizona, however, has unique laws regarding bankruptcy trustee sales. These sales are often termed "foreclosures." Arizona's laws are different from many states as they have both a judicial foreclosure process and a trustee's sale process. The lender in the case may choose whether or not to perform a judicial foreclosure or a trustee's sale. Many opt for the trustee's sale because it is cheaper and quicker for them, but the process is not necessarily the same process as discussed above and applies only to Arizona.