How a Bankruptcy Trustee is Paid
The bankruptcy laws actually set out the manner to where a bankruptcy trustee will be paid for administering a case. Payment methods, sources as well as compensation amounts differ based if you are in Chapter 7 or Chapter 13 of bankruptcy.
On a Chapter 7 case, a bankruptcy trustee is paid in two ways, which however will depend if there are assets administered on your case 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 would be with the percentage of 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 will get a portion of the profits. If there are ever no assets of which the trustee could sell and the trustee is not able to recover money through lawsuits, tax refunds or other ways possible, there will be 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.
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 will however depend with the funds that were disbursed to parties that are interested. You actually don’t have to make any extra payments to the court just to cover the commission of the trustees 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 of the interested parties and creditors will get a notice on the amounts that were requested. When there is no one who objects or after the court has held a hearing about the objections filed, the court later on will review the fee on the trustees application and then will enter an order that awards the fee.
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.