How a Bankruptcy Trustee is Paid
In the bankruptcy law, it sets out the manner as to how a bankruptcy trustee is going to be paid for the case of administering a case. The sources, compensation amounts as well as the payment methods differs depending if you are in Chapter 7 or Chapter 13 of bankruptcy.
For the Chapter 7 cases, a bankruptcy trustee will be paid in two ways, which however will depend if there are assets that are administered in your or not.
One of these ways would be where the trustee will receive a $60 administrative fee that comes from the bankruptcy filing fees that are being paid to the court clerk when you will file the case (being based as of June 2018). The trustee will not be able to acquire the administrative fee if the court waives the filing fee.
The other one is through getting a percentage on the bankruptcy assets. This is where a Chapter 7 trustee will get a commission on the bankruptcy assets that are sold for the creditors benefit. The trustee is going to get a portion of the profits. When there are no assets for the trustee to sell and that the trustee does not recover any money through the tax refunds, lawsuits or perhaps through other means, theres no fee paid to the trustee. The commission will come from the money which were collected from selling the nonexempt assets or through recoveries on lawsuits that were brought by the trustee.
In case the trustee collects the assets of the case, sells it and makes payment to its creditors, the trustee will be able to get a commission based on the money thats been collected. The amount will however depend with the funds that were disbursed to parties that are interested. Theres no need for you to make extra payments to the court for you to cover the trustees commission in Chapter 7.
In order to get paid, the trustee should file an application for compensation to the bankruptcy court. All parties interested and creditors are going to get a notice with regards to the amounts which have been requested. If in case theres no one who will object or after the court holds a hearing about the objections that were filed, the court is going to review the fee on the application of the trustee and enters an order which will award the fees.
A Chapter 7 trustee also could recover costs on the expenses such as the professional accounting fees. But just like the commission, it will only happen after the trustee is going to file a fee application as well as a request on the reimbursement of the costs and is going to be approved by the court after the notice to all parties who are in the bankruptcy case.
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