How Bankruptcy Trustees are Paid
The bankruptcy laws actually set out the manner to where a bankruptcy trustee will be paid for 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.
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 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 is not going to get the administrative fee if the court waives on 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 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 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.
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 of it however depends on the funds that were disbursed by parties having interest. You don’t need to make extra payments to the court just to cover up the commission of the trustee in Chapter 7.
In order to get paid, the trustee should file an application for compensation to the bankruptcy court. All interested creditors and parties will receive a notice about the amounts that were requested. If ever no one will object or perhaps after the court holds a hearing with regards to objections filed, the court will review the fee of the trustees application and will then enter an order that awards the fee.
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.