How Bankruptcy Trustees are 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 it is where the trustee will get a $60 administrative fee from the bankruptcy filing fees which you pay to the court clerk if you are going to file the case 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 commission will be acquired by the Chapter 7 trustee on bankruptcy assets sold for the creditors benefit. The trustee is going to get a portion of the profits. When theres no asset which the trustee could sell and if in case the trustee cannot recover money through tax refunds, lawsuits or other actions, theres no other fee paid to the trustee. The commission is going to come from the money that has been collected from the sale of nonexempt assets or perhaps the recoveries on lawsuits that were brought by the trustee.
If the trustee will collect the assets of the case, makes the necessary payment to the creditors or sell it, the trustee will get a commission from the money that were collected. The amount however is going to depend with the funds that have been disbursed by parties who have interest. Theres no need for you to make extra payments to the court for you to cover the trustees commission in Chapter 7.
In order for the trustee to be paid, they need to file an application for the compensation with the bankruptcy court. All interested creditors and parties will receive a notice about the amounts that were 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.
The Chapter 7 trustee may also recover costs for the expenses like the professional accounting fees. Like the commissions, it only happens after the trustee is going to file a fee application as well as a request on the reimbursement costs and if this is going to get approved by the court after the notice from all the parties in the bankruptcy case.